He is a toy Chatter Telephone, based on the similarly-named toy manufactured by Fisher-Price since 1961.
He is one of the oldest toys at Sunnyside Daycare and can't speak unless his receiver is lifted from its cradle (although he said good luck to Woody with it on) and if he wants to say something, he rings as a way of getting someone to pick up his receiver.
He is first seen when Andy Davis' remaining toys arrive at Sunnyside and tries to warn Woody about how horrible it really is there, but Woody only thinks he's saying hello in a shy manner. He's later seen in the upper part of the Caterpillar Room when Woody returns after coming from the Butterfly Room via Bonnie's backpack. Chatter Telephone rings to get Woody's attention When Woody picks up the phone, Chatter Telephone tells Woody that he shouldn't have come back, due to Lotso adding more guards and patrols, but gives Woody advice by giving him an escape route of Sunnyside. He also warns him about about The Monkey: a toy monkey that serves as chief of security at Sunnyside. He tells to Woody that if they want to escape they have to get rid of him.
He claims that he can "never be broken" though when they figured out he helped Andy's toys escape, Lotso and his gang break him. Fortunately, Woody fully understands what Chatter went through and sympathizes with him. In the end credits, the toys at Sunnyside repair him and the chatter telephone is fixed, enjoying his new life.