It could be the phone lines. Hop 1 looks like it's seeing a lot of packet loss. I can't tell for sure if the latency characteristics are similar between hop 1 and hop 11, but they probably are (you'd need to set your "samples to include" to something closer to 100 to get good statistical relevancy).
The packet loss you're seeing is definitely starting at hop 1, though. It's impossible for PingPlotter to tell you whether this problem is your phone line or your ISP, but general experience on this front usually leads to a problem with the physical carrier - which is the phone line in your case. If you use the phone for voice, do you have any quality problems? How about any echo or background noise (do you hear busy signals, dial tones, or other people talking)?
There's a pretty good site that has troubleshooting information for modems:
http://www.modemsite.com/Depending on the modem brand you're using, you can probably find some information about the phone line quality from your modem itself.
www.modemsite.com can probably help you with that. If your modem can show phone line quality problems, then your phone company may be more motivated to help you.
Best wishes,
Pete