Here is a super simple phone busy indicator. It should only cost a few dollars to build!
“Have you ever been using the modem or fax and someone else picks up the phone, breaking the connection? Well, this simple circuit should put an end to that. It signals that the phone is in use by lighting a red LED. When the phone is not in use, a green LED is lit. It needs no external power and can be connected anywhere on the phone line, even mounted inside the phone.”