There is a box on the side of your house, usually gray in color, where the phone lines come into your home. The one in the photo was painted over the last time the house was painted. For some reason, this house has two such boxes. The one on the left happens to be the active box for the phone service. The box may be mounted low on the house and may be a different shape.
Step 1: Open the Terminal Box
Step 2: Check the Voltage
Set your voltmeter for the range that can read 50 volts DC. Attach the leads to the terminals for the red and green wires. If all is working well with the phone company's lines, the meter will give a reading of about 50 volts, give or take a couple of volts. If there is a problem with the phone company's line the voltage reading will often be less than one volt. When the phone company representative tells you it will be very expensive for you if the problem is in your lines inside the house, just say, "I put my voltmeter on the terminals in the box where your lines enter my house. There should be about 50 volts DC at the terminals, but there was less than one volt." The representative's next words will be something like, "We will send someone right out."
Some newer terminal boxes have a modular plug receptacle rather than brass terminals you can access. Simply plug a phone into the modular plug receptacle and check for a dial tone.