Let's see -- an ISDN-quality (quality? I use the term loosely) codec should be under $50 single quantity, the data rate isn't very high so you don't need much of a CPU (6811 might even be enough, and they're easy to interface to things -- lots of on-chip I/O). You'd need a modem-style encoder for the output (running digital from box-to-box -- "analog" scrambling (Time or Frequency domain) is way too easy to break) so maybe another $50 DSP chip... after all, you don't need to support 30 different baud rates, just one data rate with perhaps a low-line-quality backoff. The codec is pretty cheap, but you want a nice low bit rate so you can send the encrypted data over the phone. Some talk of how to do this is happening on sci.crypt. I have a scheme which I plan to float around at the cypherpunks meeting on Saturday. However, the hardware ends up being on the expensive side ($150 or so).