Do need long distance service on my landline to call out?

I recently had my landline hooked up again after much ballyhoo. I was told that I could get a simple local service without long distance. I found that I was unable to call out without getting a fast busy signal when I called numbers I had always called. The repair man from AT&T that was sent to check it out called me and said that it was because I did not reinstate my long-distance service. It said it would allow me to call within a 7 mile radius or so as usual but when I tried to call cell phone numbers etc. I would get the fast busy signal because I did not have long distance service. What??? Is this true? This whole thing has been a nightmare.