AT&T has code in these devices that prevents this type of activation and flashing the device with another carriers handheld code won't get around it.

Try it with a T-Mo device and see I bet it will work. No matter what, it has to be activated at least once with a SIM card that has a data plan because the factory policy does not permit a WiFi activation directly out of the box. I tested this a bunch with the 9000's but haven't revisited it with the 9700. Let us know what you find.