unactivated iphone for development

i'm having trouble using an iphone for development. i have an iphone that i've been using for development and i don't have service for it. today, i tried to update it to beta 7 and found that the only way (at least that i could find) to activate it in itunes was to connect to at&t.

has anyone else run into this? is anyone else using an iphone without cell service for a development device?