If your ISP is using PAP/CHAP, then your chat script is much simpler. All your chat script needs to do is dial the telephone, wait for a connect and then let pppd handle the logging in!
#!/bin/sh
#
# This is part 2 of the ppp-on script. It will perform the connection
# protocol for the desired connection.
#
exec /usr/sbin/chat -v \
TIMEOUT 3 \
ABORT '\nBUSY\r' \
ABORT '\nNO ANSWER\r' \
ABORT '\nRINGING\r\n\r\nRINGING\r' \
'' \rAT \
'OK-+++\c-OK' ATH0 \
TIMEOUT 30 \
OK ATDT$TELEPHONE \
CONNECT '' \
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