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For those who missed the joke: Payphone hackers (often called phreakers) discovered that a toy whistle from Captain Crunch cereal boxes could easily be modified to play the specific tone that payphones listened for to indicate that a coin had been inserted. Basically, the phone company didn’t know when a coin has been put in, without some sort of signal from the pay phone. And typically, the only lines run to the phone were the actual phone line. So the pay phone would play a specific 2600Hz tone, indicating that a coin was inserted.
Using this toy whistle, you could essentially use payphones for free, and it was entirely untraceable until the company emptied the phone and counted the coins in the collection bin. In an era when cellphones were only for millionaires and were the size of literal bricks the world was almost entirely dependent on pay phones unless you were at home. So this was a major discovery for phreaks, who quickly began experimenting to see what other tones may be used to send signals.
Naturally, the phone companies panicked, and quickly had the cereal company pull the toys from future boxes.
It didn’t need modification, it was naturally the right pitch.