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The Alcatel SpeedTouch USB modem is one of a very few non-ethernet modems with Linux drivers. In fact, AFAIK, the only such ADSL modem. This modem is quite popular in Europe (Alcatel's home turf), and is widely used elsewhere as well. Hats off to Alcatel!
For this to work, you will essentially need three things: the Alcatel modem firmware and management utility (supplied directly by Alcatel in closed source, binary form), a properly configured kernel and PPP daemon, and the Linux modem driver and related configuration. The modem driver itself is open source. There are currently two distinct, unrelated drivers available.
When drivers were first released, the installation process required a fair amount of patching and rebuilding to make things work. Since then, things have progressed, and it can now be done without any patching (see below). How well all the pieces go together may depend on how old your Linux installation is, the kernel and PPP versions, and possibly what patches your vendor may have applied to their own packages. Recent Linux releases probably have most, if not all, of this already done, and hence you may not need to do any patching. I believe this is true of recent SuSE, Mandrake, and Debian (and probably others as well). You still need the Alcatel binary firmware, and a driver for the modem (if your distro does not include this). I would suggest checking your distro's web site, and search their archives for documents relating to this modem, and go from there as a first step. YMMV.
One obvious requirement is a kernel with USB support. USB and ATM support are better in recent kernels, and I would suggest if not using a very current Linux distribution, then at least get a recent kernel. And a quick note on kernels and patching: if using the kernel source supplied with a Linux distribution, it is most likely very heavily patched already. Applying patches to these can be hit or miss.
As always with Linux, there is more than one way to skin a cat. This is true of this modem and is resulting in some confusion since there are various documents circulating on this modem with various approaches taken. Some are more current than others too. Keep this in mind if you run into conflicting recommendations. Again, your distribution is probably the best source of documents.
There are two separate driver projects for this modem. The installation and configuration are completely different, as is the code base. Both are open source and GPL. One is a kernel module solution, originally developed by Alcatel, and now maintained by Johan Verrept. His HOWTO is located at http://linux-usb.sourceforge.net/SpeedTouch/howto.html. I think most would agree that the installation of this driver is the more complex of the two, and more than likely will require some patching (unless your distro has already done this). But, it may have some slight performance benefits since it runs mostly in kernel space. There is also the Alcatel-Speedtouch-USB-mini-HOWTO from Chris Jones, http://www.linuxdude.co.uk/docs/Alcatel-Speedtouch-USB-mini-HOWTO/. This driver can potentially support both PPPoE and PPPoA connections.
The other driver is by Benoit Papillault and friends. This one has a less complicated installation, and can be done with no patching. All the important parts here are done in user space. For inexperienced users, or just plain ease of use, this may well be the most painless way to go. The home page is http://sourceforge.net/projects/speedtouch and related docs are http://speedtouch.sourceforge.net/docs.php. This driver can also work with 2.2 kernels (2.2.17 or later). PPPoE is not an option with this driver at this time. This driver also does not use the management utility that is part of the Alcatel supplied binary package. It extracts the modem firmware, and then does its own "management", so less dependent on proprietary code. Mandrake is reportedly including an RPM of this driver now.
Since this modem potentially supports both PPPoE and PPPoATM connections, which one is better? Which ever is supported by your ISP, and then which ever works best for you! If your ISP supports both (some do and some don't), you might try each approach and make your own decision. There is no absolute right or wrong on such things. There are just too many variables. Theoretically at least, PPPoA should utilize a little less overhead and system resources.
There are other USB modems on the market that use an Alcatel chipset, such as the Efficient Networks 4060. Do not expect either of these drivers to work with other modems. They won't. You should get a compatible ethernet modem in such situations.