Howdy: just to confirm, looking at the 202 from above, with the LEDs facing you (in other words, right-side up), the left most LED is for power. It should stay on steadily. The next LED is the internet connection, and it should flicker periodically to show activity, and then there are two LEDs, for phone port #1 and #2. Those LEDs should blink at a regular interval when the attached phone is off the hook.
If you are not on a call, and a telephone is plugged into the phone port, and that phone port's LED is blinking on and off, then the telephone is defective. If you have plugged the OBi into your home's telephone wiring, then another phone is off the hook, or you have a short in the wiring. If you are using your home's telephone wiring, you must physically disconnect the pair of wires coming into your premises from the phone company, as it will damage the phone port in the OBi and/or make that LED blink.