Well, well... so I'm not the only one with this issue either. I'm on my second GEN 3 ATV. Doesn't matter if I connect wirelessly or by ethernet on my ATTUverse... same terrible SD stream... BUT every other HD video on other apps.... trailers, weather channel, NBA/MLB highlights, ESPN, etc.... all look great.
Went over to my brother in laws house who has whole house ATV thru a Crestron/Comcast set up and it works perfectly... likely he has an older ATV with an older OS loaded.
The weird thing is it now is f#@--ng with my Ipad... it too plays the crappy SD...
I've tried a manual DNS server entry, resetting/restarting/new password/restarting the ATTUverse router...
AND NOTHING WORKS to solve the problem!
What did work was disconnecting my ATV and plugging the same wall ethernet cord into the back of the TV and the NETFLIX app works just fine that way.... ***?
I'd like to have the ATV for all the other apps and AIRPLAY that the smart TV won't do.....