Seriously? A budget phone?

Needing to replace your phone is due to the 3G network being shut down. Granted, they are shutting down 3G to move to 5G but 4G (LTE) is going to be around a very long time. There is no need to switch to a 5G phone yet and I would bet the cheap free replacement phone they sent you isn’t even 5G. In case you haven’t noticed, all carriers are shutting down 3G and moving to 5G. Your resistance to the transition is futile. It will happen.

its a free phone, dont like it dont use it, let us know how your phone works in February 

There is a difference between "providing 5G" and "shutting down old 3G facilities".  These things are related in that shutting down 3G frees spectrum for 5G.  They are also related in that a newly-sold-by-AT&T 5G phone will work where there is 5G and will probably also work where there is LTE, i.e. won't have a problem due to "shutting down old 3G facilities."

If your phone can be made to work without the 3G facilities, great; you don't need a 5G phone.  But AT&T is telling you, by sending you a phone, that in their never very humble opinion your current phone isn't going to work properly without 3G facilities.

Its fine to shut down 3G. I do not have any problem with this. We knew it was coming and its not a big deal. What is particularly infuriating is how AT&T is telling me that my phone is not 4g Volite compatible but it actually is. A large body of people in a similar situation as me believe the true issue is with these phones being unlocked and not purchased through AT&T. This also wouldn't be a big deal if AT&T would just say "We are not doing the unlocked and non-AT&T phone thing anymore". 

Have you seen the list of unlocked phones supported by AT&T post-shutdown?  It's 5 pages long.  Clearly they aren't totally abandoning unlocked/non-AT&T phones.  But they are being more picky about them.

Point for @JefferMC. Still, why though? I admit resistance is futile and I will have to buy a different phone, again, but it all still feels dirty. Perhaps I am just mad at being forcefully pushed into things I don't want or need. Of course, it makes a bit of sense from an infrastructure point of view. 5g better utilizes the bands to which it has access and, hopefully, it really does mean users will have a better experience on their mobile devices. 

The thing is, ATT will support unlocked phones if the phone manufacturer submits it for certification. I don’t think ATT is being more picky, I believe the manufacturers are for whatever reason not submitting them for certification. If you have an unlocked phone not on the list, it’s because the manufacturer either opted not to submit it or it failed certification. It’s most likely the former, it wasn’t submitted.

I really wish AT&T would adopt a more open "we'll enable whatever feature you say your phone supports on your account, but don't come for us for support if it doesn't work as expected" stance. Limit the customer/technical support to the phones on that list, but don't refuse to enable things at the account level. 

Apparently T-Mobile won't take just anything either. 

Imei checker

Verizon has always excluded phones, AT&T and T-Mobile have allowed anything.   

But with the 3g shut down, many phones don't work with voice over LTE now.  Which means that in three weeks they will have no voice service at all and must be removed from the network.