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I recently moved to a new home and I noticed that the phone jacks (RJ-11) were connected using Cat5e cable. I'm thinking I can replace the RJ-11 plugs with RJ-45 and use Ethernet over the existing Cat5e cable in one particular room to avoid having to run a cable under the carpet. The cable guy who came out to install my home internet and land line said that I could simply unplug the Cat5e cable from the telephone tap box and terminate it using a female or male RJ-45 and then treat it as if it were a normal cable. I am afraid that somehow the cable might be "daisy-chained" somewhere in the walls and therefore by hooking up and sending data over the new Ethernet connection, it might screw up my home phone. I also read somewhere that the ringing over a phone line generates something like 70-90 volts and "could fry my Ethernet card".

I did some research (here & here) and apparently the Cat5e cable only uses 1-6 of the wires leaving the last twisted pair unused. Does this mean when Cat5e cable is used for phone connection, only wires 7&8 or the last twisted pair are used for the phone line connection leaving 1-6 or pairs 1-3 available for Ethernet? If so, that would mean I could run the Ethernet connection safely because no data would ever be sent over the last pair which is the phone connection and therefore no data would be interrupted? If its any help to this theory, I noticed the brown wires (last twisted pair) were crimped or connected together in the wall jacks.

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Yes, with it being cat-5e cable, you could repurpose it as network cable by installing rj-45 jacks. Early Ethernet (10mBit & 100mBit) used two pairs (4 wires) and Gigabit typically uses all 4 pairs (all 8). Your Cat-5 link is referring to 10/100 Ethernet, so only two pairs are used. The other two pairs could carry a phone line each or another Ethernet connection (we used this on IP phones, the computer was on one half and the VOIP on the other half, figure out the color diagrams yourself for your RJ-45s on the second half). My preference is to not muck around with this as the first time you plug in a Gigabit equipped computer, you face getting full ring voltage into its RX/TX for the second set of pairs. Wire it for Gigabit using all pairs and be done with it.

In the good old days of 25 wire straight cable, daisy chain was common installation technique, with the advent of CAT-4 and above phone installations I have worked with have all been star to a central patch panel.

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Never underestimate a stupid owner/installer. my water line had a 45 cap in it @ the ice maker T. get a volt meter after you have unpluged the line you think is going to that room an have some one call you while you have the meter attached. a phone could work as well. see if any other phones are not righing either and if the phone you expect to be dead is really dead. –  Kendrick Sep 16 '12 at 0:45
    
Definitely a "Really Good Idea ™". As a moonlighting network and systems engineer, I've seen some real doozies. It's bad when the self taught "professional" has to correct the leftovers from hired contractors. You learn early on to pair up your network upgrades with suggestions for who needs to be doing the wiring so you don't have to re-do it. –  Fiasco Labs Sep 16 '12 at 2:15

Yes, you can re-purpose cat5e wire to run Ethernet. The man challenge is the wiring pattern, Ethernet used to be daisy chained, but those days are gone. If your existing wiring is not a point-to-point run, you will have to convert it to a point-to-point run to get the results you desire.

While the wire was rated as Cat5e, remember that the installation might not be Cat5e. It isn't enough for your materials to be a high enough grade, an improper installation can degrade performance too. With an existing wire, you cannot know details about bend radius, whether the wire properly runs perpendicular to power carrying lines, etc. But, it's so easy to convert a line, that I would recommend converting it and testing it rather than attempting to inspect (if that was even possible) beforehand.

Buy a small patch panel block if you intend to have multiple lines running to a central location. Use a spring loaded 110 punch down tool. It's very easy to hit 100 MB/s with Cat5e, even on a poor installation. It's a bit harder to hit 1 GB/s, but such speeds are not out of reach, I've seen it done.

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