I realize that this is an old thread, but feel like I need to correct some things for others who come across this thread.
There are a couple of factors that determine how well a transmission medium will work for moving an electronic signal.
1. Characteristic Impedance
2. Crosstalk
Characteristic impedance is the AC "resistance" of the medium (copper wire in this case). 10/100/1000 802.3 Ethernet is all designed for 100-ohm differential impedance. Any two set of conductors that are situated in such a way as to provide this impedance will carry the signal just fine [1], at least in one direction. That's where the second part comes in...
Crosstalk in the conduction of one signal on a wire to an adjacent wire due to the electromagnetic (EM) fields generated by the moving electrons. This is why the pairs of wires are twisted. The differential signal (same transitions but opposite polarity) on the twisted wires help cancel out the EM fields so that they are picked up by the adjacent pairs in the cable. Crosstalk causes distortion of the signal that the victim wire is trying to carry.
So.... if the impedance is close enough and the crosstalk is small enough then you're likely to get a working connection between the two ends.
Category-3 cable is designed for 10Mbps. By itself it may perform better. However in an installation where there are multiple of these cables bundled (such as entering a switch/router rack) it's unlikely to do better than the 10Mb.
I also saw someone mention about different number of twists between pairs in a cable. This is done so that the twists don't line up between pairs. This makes sure the EM fields don't amplify.
[1] In Dr Howard Johnson's book "High-Speed Digital Design, The Art of Black Magic" he tells a story about a booth at a conference where a manufacturer of ethernet PHY ICs was showing how superior their chips were because they worked over barbed wire. He pulled out a ruler and measured the distance between the conductors and determined that they were spaced perfectly to provide the correct impedance. Any manufacturers chips would have worked with that setup.
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