Time Capsule as Router
Do I need to use Time Capsule as a router to connect to an ATT modem or can I directly link with an ethernet cable from the modem to my MacBook Pro?
MacBook Pro 13″, macOS 10.15
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Let's first clarify on whether the device that you call an ATT "modem" is really a simple modem. Chances are, it's not.
A modem will have only one Ethernet port. If your "modem" has more than one Ethernet port, it is a modem/router, also called a gateway. This is a device that combines both a modem and a router in one physical package.
So, if your ATT "modem" is really a modem/router or gateway, then you can connect your MacBook Pro directly to the device using an Ethernet cable connection. Be sure to turn off the WiFi on the Mac, to make sure that the connection will be over Ethernet rather than WiFi.
If you are planning to use the Time Capsule for Time Machine backups from your Mac, the Time Capsule will also need to connect to the modem/router or gateway using an Ethernet cable connection.