We presented a generalized formulation of digital waveguide networks derived from a vectorized set of telegrapher's equations. Multivariable complex power was defined, and conditions for ``medium passivity'' were presented. Incorporation of losses was carried out, and applications were discussed. An efficient class of loss-modeling filters was derived, and a rule for checking validity of the small-loss assumption was proposed. Finally, the form of the scattering matrix was derived in the case of a junction of multivariable waveguides, and an example in musical acoustics was given.