In this piece, Engadget's Will O'Brien describes and illustrates the process. The Engadget sketch at the top of this post depicts how this setup will look when it is completed.
"The idea for this one is pretty easy," Will writes. "We'll visit the ugly box that Ma Bell graciously left on the side of every single building, ever. Inside it, we'll cut the leash and take control. Back inside, we'll hook up our handy VoIP adapter so we can use the existing phone jacks that run all over the house."
When all is said and done, the phone jack be connected to a wall outlet inside the house. An Endgadget screen cap depicts this step:
With this step enabled, an Ethernet cable can go to a router, and the VoIP adapter (from Internet phone company Packet8 "can," as will describes it, "live happily on our server rack, where it gets a UPS (Uninterruptible Power Supply) and delivers phone service to the rest of our house through a pre-existing phone jack."
Full disclosure: I'm the blogger for BBHub, a sister site of Engadget's on AOL's Weblogs, Inc. network.