Virtual Circuits are often referred to as a 'cloud'. If you look at a wiring diagram, connections enter the cloud and come out the other side. What's in the cloud? Nothing but software, which can be programmed.
"Each exchange has a number of 'Virtual Circuits' which connect the exchange to BT's ADSL Network, which inturn then connects to the NDO network. The capacity of the 'Virtual Circuits' is limited and in some exchanges congestion is occuring at peak times where there is not enough available bandwidth across the Virtual Circuits to satisfy the usage levels of all the users connected to the exchange. If you find your connection is slowing down at peak times (the Internet Peak is normally from 7pm to about 11pm at night) use this tool to find out if your exchange is affected".
Extract from click here