What's this icon?? Little phone receiver on menu bar

The phone is in a call. Read the top of the frame. Touch that bar, return to the phone screen, and cancel the call by pressing the red button. The icon should disappear.

I note that Apple's website says that if you put a sim card in from a carrier not on their list it turns the TTY setting on.

This does not include the setting to turn TTY on or off is removed or no longer available in this situation. Not sure what to do about this either. You can try restoring your iPhone with iTunes from your iPhone's backup or as a new iPhone or not from your iPhone's backup.

It's a phone that's approved-unlocked by O2 that I'm using with Airtel in India.

I note that Apple's website says that if you put a sim card in from a carrier not on their list it turns the TTY setting on.
http://support.apple.com/kb/HT3519

My carrier (Airtel) is on the list though, although having bought the phone in the UK, had it unlocked by O2 and now using it with a general Airtel SIM card, not one sold with one of their Indian sourced iPhones, so I guess that's how it got turned on. But I don't have the setting to turn it off - not sure what to do about that.

Shows that TTY is on.

Choose Settings > Phone to turn TTY on or off.

I do not have a TTY option under settings->phone - but I do have the icon and I do get asked whether I want to use TTY or Voice sometimes when I make a call.
Is there another way of turning it off?

All iPhones include this setting at Settings > Phone under the Calls section, which is the ONLY way to turn TTY on or off. TTY is not turned on be default with ANY iPhone and this is the ONLY way to turn it on or off if it has been manually turned on.

By chance are you using an iPhone that has been hacked?

A solution at last! Kept Googling and found this post;
http://forums.whirlpool.net.au/forum-replies-archive.cfm/1230199.html

The key is to reset all settings on the iPhone - after the phone comes back to life while various settings have been lost (no data or carrier config settings lost, but did lose my saved/cached WiFi network passwords, arrangement of apps to iPhone screens and iTunes credentials and probably a few other things) the TTY icon has disappeared - wonderful.

Message was edited by: hedgert

This means TTY is enabled, which is for the deaf or hearing impaired.

Settings > Phone > TTY > Off.