Step 1: Circuit 1.
Step 2: Circuit 2.
Step 3: Circuit 3.
Step 4: Cabling.
Telephone cable: Cheap and easy to connect to. either the two or the four line will work as long as you use the corresponding lines.
Cat 5 cable. Do not recommend using cat five cable unless the rj45 cable ends are not connected. There can be real problems. Newer 1g networks use all eight lines so you would not be able to use the cable anyway. Secondly there is risk of damage to equipment and safety issues if you connect eight wire devices (i.e cable tester) to the network. Direct connecting two computers requires a crossover cable. Wiring for crossover cables varies, so you really have to know what you are doing. Get a qualifid professional to help you if you are the least bit unsure of what to do. Lines seven and eight sometimes are best to use but not always. Check your cabling for sure. Get a head set. Instead, I would recommend using telephony software that does not require a commercial host. Then you do not even need the telephone.
Note: this frame was wiped out during editing so I had to redo it from memory. The one time I did not save the page, I knew it would happen.