You guys could still talk on the phone, but both have to be comfortable with it. You guys could still hang out and talk without the phone too.
Sex is a complicated thing. Personally, if you have been in a relationship for a long time (like 3 years) you might be ready, but my health teacher told me the greatest advice about this:
If you are unsure if you are ready, go to the nearest drug store, grab some condoms, and buy them. If you are completely embarrassed, then you are not ready. If not, then you are. BE HONEST with yourself.