Usually if it's a phone company end issue and you have no dial tone, when someone calls the phone just rings and rings for the other person but it never actually rings at your end.
The fact that they are hearing a busy signal makes it sound like the phone system thinks you're "off hook" somewhere.
If you have access to the Dmark (where the phone line enters your house), try opening the customer side of the Dmark and unplugging the two (typically) phone jacks inside. Remember the order so you can put them back later -- you are specifically interested in "Line 1" if the ports are labelled. If someone now tries to call you, do they still get a busy signal or does it now sound to them like it's ringing?
If it's a ringing sound for them, then there is a phone inside your house somewhere that's gone whacky. Try unplugging phones to see if the problem abates.
If not, try plugging a standard non-powered phone (a regular old phone) if you have one into the each of the phone jacks in the Dmark box successively. If you don't hear a dial tone on either one, then plug them back in and go call the phone company because the problem is at their end, not yours. Tell them you "tested the connection at the D-mark" and there is no dial tone present. They'll have to roll a truck or check it from the central office.