Ethernet and telephone cables look very much alike, even using a similar terminating plug. The difference between the two becomes apparent when you cut through the sheath and discover the internal wiring that each carries.
Standard telephone cable contains four wires. It is unshielded and designed with the bandwidth necessary to carry voice communications. The low demands of this type of communication do not require twisting or exhibit a great concern over signal loss. The low bandwidth makes this wiring unsuitable for data communications.
Ethernet cables contain four twisted pairs of wires. The twists in the wires help to rebuff induction and crosstalk on the lines. The Ethernet cable is designed to carry communication traffic at a minimum of 10 megabits per second. Cat 5e rated cable is currently the lowest acceptable standard for data communications.
The RJ-11 terminating connectors used on telephone cable and the RJ-45 connector used on Ethernet cables appear to be cousins. They are similar in design but differ in the connectivity. The RJ-11 is a four-wire connector and the larger RJ-45 has eight pins for connection.