Even with the contacts deleted, there is still a device identification that is used when powered on to connect to the wireless network. If the previous owner reported this cell phone as stolen, then that handheld identifier would be banned from the network and you will not be able to get service put on it.
I suggest figuring out which cell phone provider it came from and returning it to them for recycling and get your own. If you're not sure how to figure out which cell phone provider the phone was with before, then take it to any cell phone place and they'll tell you.
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