Adding to my previous post:
Disconnect the Ethernet cable from the OBi. Disconnect the power cable from the OBi. Wait a few seconds, then, with only the telephone cord, not the Ethernet cable plugged in, plug in the power cable. The left-most LED should be solid red for a few seconds, then change to solid green for a few more seconds, then it should start blinking green. The right LED (for the VoIP service) should come on, and then go off after a few seconds. The left-most LED should be slowly blinking, and the other LEDs should be off. This is because there is no network cable connected, so the OBi can't get an IP address.
Now, pick up the phone handset. The right-most LED should start slowly blinking, and you should hear a dial tone. Does that exact sequence happen, and can you hear a dial tone?
If you can't get this far, then either your OBi or its power supply are bad. If you have another 12VDC @ 1A power supply available, try swapping it. If the device still fails, it's defective.
If the test above DID work, then key in ***8 then at the prompt, key in 1, to restore factory defaults. Give the device time to do this, for a good minute or so. Pick up the phone again. Do you hear a dial tone? If so, power off the OBi, reattach the Ethernet cable, and power it on again. After rebooting, the left-most LED should be on solid, the middle LED should be flickering, and the right-most LED should be on solid, and you should have a dial tone. Are you now at that point?