A handset actuated signal intercept circuit is located in a telephone central office and connected to the tip and ring leads of a telephone subscriber line. The signal intercept is operated from central office subscriber line power, but draws so small a current that it is undetectable in normal telephone usage. When a subscriber handset is lifted, the signal intercept detects dial tone and initiates a timing interval of predetermined duration. If no dialing pulses or tones are detected during this interval, the central office channel and trunk which are seized by the initiation of dial tone, are then freed for use on other subscriber lines. Alternatively, if the subscriber line is not authorized for use with touch-tone equipment, the appearance of selected touchpad tones on the subscriber line during the predetermined interval following the initiation of dial tone will activate a gate, which produces an alternating current short across the tip and ring leads of the subscriber line, and prevents further touchpad tones from getting out from the subscriber line.