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CAT5 is fine for telephone
You do not "need" all 4 pairs for your network, you should be able to use 2 pairs for your two lines and the other 2 pair for the network.
As I have gotten out of the biz I have tossed all my notes on how to do the network with just 4 conductors, but pretty sure it is Tip2/Tip1/Ring1/Ring2
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