Bell wire
There is some confusion about the requirement for the bell wire in a UK telephone installation, and a number of myths have arisen - especially around DSL filtering. This page aims to explain why the bell wire exists, and why you might still need it.
History
When the 'new' BT Phone Socket was introduced in the early 1980s the telephone system had not yet been deregulated - British Telecom had a virtual monopoly, subscribers rented phones from them, and pulse dialling (aka Loop Disconnect) was the order of the day. The BT Phone Socket was a step forward, to allow subscribers to buy their own phones and simply plug them in. Before the BT Phone Socket, an engineer would have to install a new phone because the wiring was more complicated.
UK Telephone Wiring
A UK telephone service is (traditionally) delivered to the premises on a twisted pair of insulated copper wires - in the future this may change to fibre-optic cable. The two wires are referred to as 'A' and 'B' wires. In the past BT stated that the 'B' wire would always have a more negative voltage on it that the 'A' wire, but this seems to have now been dropped. The 'A' and 'B' wires carry voice signals (including tones such as dial tone and ringing tone), and ringing current to drive telephone bells. With pulse dialling, the wires also carry dial pulses - whereas tone dialling sends tones on the voice circuit instead.
When a telephone is 'on hook' (a term dating back to candlestick phones) - i.e. the handset is on the base, then there is no current drawn from the 'A' and 'B' wires, and the voice circuit is disconnected from the line. When a telephone is taken 'off hook' - i.e. the handset lifted off the base, current is drawn on the line, connecting the voice circuit, and the current drawn (looping the line) signals the exchange to issue dial tone.
With the telephone back 'on hook', incoming calls are signalled by ringing current being applied to the line by the exchange. This is a large AC voltage - about 80V. In order to separate the ringing current from the rest of the telephone, a bell capacitor is used to route the ringing current to the bell.
With pulse dialling (loop disconnect), the dialled numbers 0-9 are signalled by the appropriate number of pulses briefly disconnecting the loop - except that 10 pulses are sent for number 0. This causes the audible clicks in the earpiece - in fact, you can count the pulses. But there's an issue - the brief pulses of disconnection of the loop get seen by the bells of other telephones on the line, which can cause those bells to tinkle as another phone dials.