In a simpler term, this step is to change an ATT-phone as a genetic one, so we can flash the firmware from other carriers.
Move in side LumiaFlashTools>>Driver folder, and install the driver inside. When plugging the USB cable, the Windows took awhile to complete (~3-5 minutes)
Press and hold Power button until the phone vibrates (to restart) then press and hold the Volume + button untill you see a flash on the screen. The phone is now on the flash mode.
This is the critical step to flash other Lumia firmware to the ATT-branded Lumia phone.
iutool.exe -p -V D:\Nokia