Time Capsule does not have a valid IP address

We have 2 computers in our home office: a Win 7 desktop and an iMac.

We have cable internet; the cable modem (Toshiba PCX2500) is plugged (ethernet) directly into the Time Capsule, which we use as our router to the two computers (also by ethernet).

The wireless functionality of the Time Capsule has been turned off.

We’ve been using the Time Capsule like this for the past 18 months (we purchased it new) without any problems.

Last month, however, we began losing our internet connection regularly (about 3-4 times per day) and getting the dreaded golden flashing light (as opposed to solid green) along with the error (paraphrasing here) “the Apple Wi-Fi does not have a valid IP address.”

We hadn’t made any changes in our hardware; it just showed up out of the blue.

After contacting our ISP, we were advised to unplug the cable modem for about 30 seconds, then plug it back it. Most of the time this worked; if not, we had to “cycle” the Time Capsule as well.

We’re now having to do this about 4-5 times per day.

Sometimes the Time Capsule’s status light is still green when we have no internet connection. Out of the blue the connection just isn’t there.

We “cycle” the cable modem and we’re back in business every time.

Additionally, when we actually do have an internet connection, the speeds fluctuate wildly. We’re paying for 15 Mb service; as of the past 4-5 weeks, we get 15Mb about 50% of the time. The other 50% it generally averages between 3Mb and 6Mb.

The ISP’s tech support (we’ve contacted them no less than once a week since this started) swears up and down that it’s the router, not their signal or their equipment in any way. They deny all culpability.

We even had the ISP’s repair people come out on an occasion about 10 days ago to test the signal strength; they reported no problems. “You’ve got great signal strength to your home…” were the exact words.

Similarly, after calling Apple on 2-3 occasions, we get the exact same response: “It’s not the Time Capsule router, it’s your ISP.”

The last Apple technician we spoke with (yesterday) said, “I’ve been doing wireless/Internet tech support for years and I can guarantee you – 100% -- that it’s a ‘DNS caching’ issue. I’m 100% positive that’s your problem, and I’m also 100% positive it’s your ISP’s fault.”

After contacting the ISP again we were informed that they don’t have any such caching problems.

We’re tired and frustrated! Please help.