From Apple Support - Senior Advisor "...Activation Servers are overwhelmed ... there is a known issue with AT&T devices" I was not able to get any more information on what the known issue is.
Edit: It seems that when the Apple server can be reached the AT&T server may not be available, so it is a matter of getting thru to both at the same time. Ugg.
Edit: It seems that when the Apple server can be reached the AT&T server may not be available, so it is a matter of getting thru to both at the same time. Ugg.