What's the problem with my iphone 4? - 1

I have an iPhone 4S here and it's not activated (at least that's what I think) The phone has signal bars in the top left corner and also shows the carrier name… But it doesn't carry out calls, send messages, Things that a regular phone would do… I got the phone from a friend who recently had a newer iPhone activated with the same number they previously had, so the phone that I have should be off right? And The signal bars shouldn't be there? I would expect it to say 'No Service' at the top, but thats not the case. I've even looked up the IMEI number online and that also is telling me that the phone is activated. Can anyone explain to me what might be wrong? Please and Thank you

Added (1). Note: I'm only looking to use the iPhone as an iPod and I do not want to activate it.
I'm just wondering why the service notions are at the top.

You need tp take it to the store and get it activated correctly

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