iPhone keeps saying I have to update my phone or it will not receive any incoming or outcoming calla

There are several possibilities, which could be narrowed down if you post the exact wording of the error message. But without that here are things to check:

• First, update the Carrier Settings file→Manually update your carrier settings on your iPhone or iPad - Apple Support
• If that doesn’t fix it, see this→If you see No Service or Searching on your iPhone or iPad - Apple Support
• As you have an iPhone 7, see→iPhone 7 Repair Program for "No Service" Issues - Apple Support

If none of these resolve it Go to Settings/General/About and look at Modem Firmware. Is the entry blank? If it is you need to reinstall it by restoring the phone to factory settings, then restoring a backup. Back up the phone first, of course:

1. How to back up your iPhone, iPad, and iPod touch - Apple Support
2. Restore your iPhone, iPad, or iPod to factory settings - Apple Support
3. Restore your iPhone, iPad, or iPod touch from a backup - Apple Support

If none of these work you probably have an uncovered hardware problem; you need to contact Apple support using the Get Support link at the top of this page.:

Is it asking for a cellular update? You may need to contact your carrier for help.