How to Reactivate IPhone 3GS to use it as a Ipod?

My friend is letting me buy his old IPhone 3GS that works like brand new and Has no cracks/scratches or anything. He let me borrow it for a day to see how it works and etc. For some reason, my mind told me ; since my friend was logged into his itunes account and all the apps were under his account. I thought it would be a great idea to restore the IPhone 3GS, just so its faster and I don't have to manually delete every app and log out of his Itunes account and log into mine. I took it home, hooked it up to the Computer and restored it. Once it finished restoring, it popped up with the Set-Up, I chose my language, country/region, Wi-Fi and attempted to Activate the Phone. I've tried so many times to reactivate it ; it was all failed attempts as it keeps bringing up the same screen saying

"Could Not Activate iPhone"
"Your iPhone could not be activated because the activation server is temporarily unavailable. Try connecting your iPhones to iTunes (Which I have already done, doesn't work), or try again in a couple of minutes.

If this problem persists, conntact Apple Support at apple.com/support"

It might be the fact that this is an old Iphone and the data plan is no longer in service.
I just want to reactivate the Iphone so I can just use it as an IPod with my Wi-Fi.

Another question: Would it be possible to insert my friend's SIM card into the Iphone 3GS to reactivate it, then take it out after its done? Or would that interfere with his data plan and make him switch and make him have to pay for a fee or a random bill.

My tip is download the current firmware for the phone manually link below. And then when you connect the phone to itunes press shift + click on restore select the appropriate file and do that update. This is essentially doing a factory reset and an update on the phone.once the phone turns off turn it back on with a active sim card in it and connect it to a Wi-Fi network. The phone will automatically activate itself through a Wi-Fi network and then you should be good for gold.

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