Hello - I too am having this problem (currently on hold with Apple support) and am posting the highlights I found in the thread, in case any future readers jump right to the end. Thanks to those helpful folks who posted the info that I am quoting here:
"Apparently, the Apple rep believes the issue came when Verizon pushed out it's new policy to unlock the iPhones. The glitch comes from the fact that their iPhone 4's never came with SIM trays and thus were never meant to be unlocked, so they get an unlock order and now they believe they are GSM phones."
"He looked through his information and found something about an unlock policy that was last pushed through Verizon and believed this to be the issue being as how the Verizon iPhone 4 was specifically built to never be unlocked so from what I gathered, some kind of mass update to unlock phones was pushed and phones without that capability were just wrapped up into the mix and so now you have a strictly CDMA phone thinking it's a GSM phone."
"I should also note that this issue occurs when the phone is validated by Apple's servers for activation. My guess is that something about their server is recognizing this specific model as a GSM phone."
" According to Alvin, the issue occurs when a CDMA iPhone 4 is set to be unlocked. Recall that Verizon reached an agreement during a spectrum auction a few years ago to leave their phones unlocked for world-band use as a condition of getting more LTE spectrum. According to Alvin, occasionally an iPhone 4 gets registered in "the system" (not sure if this is Apple or VZ system) as being in an unlocked state.
Of course, a CDMA iPhone can't be "unlocked" -- locked/unlocked only applies to GSM phones. As a result, when you try to go through phone setup, the phone's software awaits a SIM card, which it doesn't have. (That is to say, because the network database has a certain flag for unlock status, the phone believes it is GSM and the software's logic looks for a SIM card.)"
UPDATE: Just got off the phone with super-friendly Apple guy. I provided him with the first case on the list (74*****16) and he was grateful that I provided a case with the issue already solved. He said that doesn't usually happen. He also said that he'd been hearing a lot about this issue today (Thursday, February 5, 2015).
He said a restore will fix it. I guess they've updated the software now and that should do it. Currently in the process of restoring the phone. Fingers crossed. Thanks again for posting all this helpful info, everyone.
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