The 3rd wire is for the ring as the extension sockets do not have capacitors. Make sure you connect it or you may find some phones you connect will never ring when someone calls.
Just joind the forum and read post, typical Sky engineer, clueless when comes to phone wiring. I am a self employed telephone engineer and your installed wiring is Ok, its actually cat5 grade which is better spec than voice cable. The problem is the way its connected, extensions must be wired from the master socket front plate, and if using modern electronic phones you do not need to connect terminal 3. As far as "blowing" anything the only thing that is blowing is hot air from Sky eng
3rd wire not required in this case if you are using plug in filters on all phones and devices plugged into any of those sockets, they have a ring capacitor built into them.
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