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Why is my internet connection (with a wireless router) faster than my wireless LAN connection?

The former is normally ~2 MB/s (I get ~3 MB/s sometimes too), but the latter just doesn't go above a few hundred KB/s (around 200-ish). It's pretty much useless.

When I turn off encryption, I can get the WLAN speed to go higher to 1 MB/s or so, but of course that doesn't affect my internet speed, which also uses encryption. And obviously it's not something I want to do.

How can this be? How do people get multiple-MB/s wireless networks?

(Router: Netgear WNR1000v2-VC)

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What encryption(s) are you using? – Tom Wijsman Oct 13 '11 at 18:22
@TomWijsman: WPA2/AES, but I've also tried other combinations. WEP is generally faster than WPA2, and no encryption is much faster than both -- but for the internet connection, it makes no difference. – Mehrdad Oct 13 '11 at 18:28
What type of wireless network are you using? 802.11a/b/g/n? What current rate does the adapter report? – Tom Wijsman Oct 13 '11 at 18:37
@TomWijsman: I believe I've connected using Wireless N, but I'm not 100% positive. I do believe I've tried putting my router into G-only mode (54 Mbps), which exhibits the same problem. But I'll try it again later today and post here if I'm mistaken, since that was a long time ago. Either way, I don't see why it makes a difference for the internet vs. WLAN, though... – Mehrdad Oct 13 '11 at 19:06
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@bwall: Why would the internet get 3 MB/s with no problem, then? (I've tried changing the channel, btw, with no effect.) – Mehrdad Oct 13 '11 at 19:07
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If the WLAN speed problem is file copying between Windows 7 machines, there are several known issues that could be causing the problems. Windows 7 introduces all kinds of overhead to network file sharing. Here are some tips which might improve the speed:

http://www.sysprobs.com/windows-7-network-slow

For what it's worth, there are still some lingering problems with Windows 7 file sharing speed covered in this very lengthy thread over at Microsoft Technet Forums:

http://social.technet.microsoft.com/Forums/en-US/w7itproperf/thread/4537c7b6-9761-41c5-8b47-0ecb831c8575

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