When you activated the Telo, did you select a new Ooma supplied phone number or choose to use your existing phone number?
It sounds like the Telo is not getting assigned an IP address to connect to the internet.
I don't know how you have it set up, but here is what I would do:
Turn off your modem and Telo.
Connect your Telo directly to your modem as described in the instructions for option 2A.
Turn on the Telo by plugging in the power cord.
Wait 30 seconds.
Plug in the modem.
The Telo should connect to the internet and download the latest firmware revision which takes about 20-30 minutes.
You can connect one computer to the Home Network port and then go to this page: http://setup.ooma.com
There on the Ooma Setup Home page, it will tell you that Internet and Ooma Core is connected.
I think most people who are having problems are not following or understanding the installation instructions.