Be note that OBi110 PHONE provides power and acts as phone company, so you can use it to power up your home phone system. While OBi110 LINE port provides NO power, you won't be able to obtain a dial tone by connecting a phone to it.
Just be careful when you set up the device, NEVER connect your PSTN line to OBi110 PHONE port, doing so could potentially damage the device. Since you have disconnected your PSTN line, what you experience seems to be correct behavior on the OBi side.