"I do not speak with my sister on the phone."
Translation:No hablo con mi hermana por teléfono.
From what I know "por telefono" means "by means of the telephone," which I take to mean on the phone, with the phone, by phone, etc. Spanish uses "por telefono" as the phrase to describe use of the telephone. That's just the way it is. "en" is used to describe physical locations, so "en el telefono" would indicate someone was sitting on the telephone. ;)
(rspreng) explained above that "a" is used more as a preposition of movement. Thus it would mean something closer to "toward the phone." So, you basically said, "I do not talk with my sister toward the phone." (so you must talk to her only whdn you are walking away from the phone :-)