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that would be my guess. Maybe rent a movie from itunes and see if you have the same streaming issues. Could have also been the source of the streamed material.

I'm on cable internet. I have the level above basic to allow for more bandwidth usage per month for $10 extra/mth. Even at the basic though, I was getting 20+mb/s. Your dl speed seems very very low. Check that, I just checked the AT&T site and that seems to be what you should be expected...

Then you can share your speed test results. With my ISP speeds, I have no issues with streaming any content from the internet using my appleTV

You'll love your AppleTv. It's awesome.

Definitely. I do this as well. And yes, 3rd gen is the latest.