If you are running telephone and ethernet on the same cable then it is most likely interference from the telephone pair. POTS (Plain Old Telephone Sockets) have a constant voltage of 50V and ring at 75V with an engaged voltage of 35V.
It will not be the electrical 110V causing interference because your switch cancels the noise out because it if grounded(negative) to your home installation(on which your switch runs and knows about this frequency so it can eliminate is successfully).
Why will it pick up noise from the telephone voltage? Because the power is coming from outside your house on a separate ground loop that has a unique frequency resonance which is not the same as your houses' frequency(not talking about 50hz/60hz - But electromagnetic radiation). This will cause the switch to suffer packet loss because it cannot successfully XOR noise that is generated from the phone lines voltage frequency.
To solve this problem in order of cheapest to most expensive:
- Do not run the phone line on the same cable as Ethernet.
- Buy a VoiP router like Linksys SPA family and plug your phone line in there and route all traffic via ether to IP phones.(But also you can then run the phone out from the SPA because it is grounded at your home and you are within the loop)
Please Note:
Some distribution boxes have a lightning protector or surge protector installed that link in the actual earth(also called ground) but earth is used in UK, Some parts of EU and ZA(not sure about USA) to detect appliance fault and gives lightning a short path to the earth. Usually the earth bar is connected to a rod that goes into the ground outside the house or bound to the incoming phase shield which is earthed at the main power box. When I talk about ground I mean the actual negative(-) wire of an appliance or analog / digital circuit.
NEVER TRY TO GROUND(NEGATIVE) THE TELEPHONE TO YOUR HOME GROUND OR A GROUND LOOP ISOLATOR
As it seems the OP grounded his telephone but it is most likely earthing the cable not actual negative.
Doing this can cause damage to the telephone network costing you thousands dollars and/or cause death or serious bodily injury from electrical shock. Remember that the ground of your home has a different impedance than ground from the telephone network and can result in 110V electrical shock! That is why it is illegal to rewire telephone sockets in many countries. For your own safety.
Yes, you can pull out your existing telco punchdown block and replace it with a suitable block for Ethernet networking.
What you're really looking for is a Cat 5e (or better), T-568A or T-568B compatible punchdown block with RJ45 jacks. That's TIA/EIA-568 revision B, which is essentially identical to the older AT&T 258A (Systimax) standard, which was originally designed for telephone service. T-568A and T-568B are electrically compatible as long as the same standard is used on both ends of each segment. T-568A is still the official data networking standard, but a lot of vendors use T-568B. Whichever; just make sure the same standard is used on both ends of each individual length of cable.
So a typical structured cabling solution works for phones and data networking, although a residential solution may bridge tap all of the phone lines so all the extensions ring together, and that's completely incompatible with Ethernet networking. It's also easy to bridge tap multiple RJ45 ports together in the future if that becomes desirable.
Your new punchdown block
First confirm that those cables in the wall are Cat5e. If they're only Cat5, then you'll only be able to reliably use Fast Ethernet (100Mb/s), not Gigabit Ethernet (1000Mb/s).
You'll fasten your new punchdown block to the back of your media cabinet, then punch your incoming cables down to the new block. There's an example below (picture), but you can literally just walk into a big box store and grab one for $20 or so. Then you'll run short Ethernet patch cables between this punchdown block and your switch or router. T-568B is also compatible with telephones, so this upgrade won't prevent you or the next owner from using those existing wall jacks for telephone extensions later if you want to.
You'll want to confirm that your RJ45 wall jacks are wired up to the T-568B standard.
You'll fasten your switch(es) and/or router(s) to the back of your structured media enclosure as well, then you'll use short Ethernet patch cables to make connections from the switch/router ports to your wall jacks.
Someday you might want phones again
If you want to bridge some ports to turn on some telephone extensions in the future, you could easily do it with a little creative crimping of RJ-45 and/or RJ-11 plugs to connect all the right wires, which you would then plug into the RJ-45 jacks you want to connect phones to.
Or you could just buy a telephone interface hub similar to the one pictured below, which lets you adjust which jacks are bridged together using bridge clips. So you would snap on whatever bridge clips suit your purpose, then use regular telephone patch cables (2 or 4 wire) to connect the wall jacks to the telephone interface.
I guess I should clarify that you can plug RJ-11 (phone) plugs into RJ-45 jacks.
Best Answer
Gigabit Ethernet
If you need Gigabit Ethernet (1000Base-T), you're out of luck and will have to run new wires with CAT 5e or better cabling. It's likely not that difficult depending on your house. It seems like these jacks are above each other in the same place on each floor. Thus, you could easily drop a cable down from the upper floor and run them all down to your bottom floor. If the cables are in different spots, it'll be more challenging. However, you could just cut a small hole in your wall and then you'll need to cut another small hole in your frame using a bit like this. It's not as bad as it seems - especially if there's already a wire you follow (ie: your telephone line).
Fast Ethernet (100 Mb/s)
If you're only interested in Fast Ethernet (100Base-TX, ubiquitous), you can rewire those telephone lines to become ethernet lines without much work, provided the existing cables are CAT 5 or better. Check the outer sheath of the cable to determine what you have. If it is only CAT 3 then you are out of luck. You'll have to make a few concessions for that to work:
The telephone wires in your house have 3 twisted pairs. Ethernet is usually ran with 4 twisted pair wires. However, for 100Base-TX, 2 of those twisted pair wires aren't used as only the orange and green are used for transmit and receive. The blue wires are used for Power Over Ethernet. From your pictures, you should be able to wire a RJ-45 Keystone Jack with all 3 pairs of your wire.
Basically, you'll need to take your orange, green, and blue wires and connect them to the terminal on your RJ-45 jack on each floor. On the middle floor, where you have 2 wires, you'll need 2 keystone jacks. Then, you'll need to put an ethernet switch in the middle floor and connect both the top and bottom floor (along with the middle floor). If you're only interested in connected the top and bottom floor, you can put in a small 6" patch cable to connect the top and bottom floors together. Obviously, you'll need to remove your telephone jacks to replace them with the RJ45 keystone jacks mentioned previously. While this solution isn't the fastest, it take minimum effort to get up and running.