No, it is not "required" like it was for the TiVos.
It fully utilizes the entire system, if the phone line isn't there.
However... per the "contract" with DirecTV, you will have it hooked up to a phone line.... so they could (if they re-implement it), disable packages/mirrored boxes, ect... if you do not have a phone line.
Plus you won't be able to do PPV via remote, without a phone line.
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