Connection Issues with Apple TV

I have an Apple TV 2nd Gen with the newest operating system.

Standard ATT 2Wire modem router with new ethernet cables

Highest download and upload speeds possible for my home.

So, the other day my Apple TV randomly dropped the internet connection as I was watching Netflix. It was still connected to my local network yet did not connect to the internet.

I unplugged the ethernet cable and restarted in order to get it to switch to WIFI however, after 10 restarts + a full system reset it still acted like it was connected via ethernet. It finally clicked on to WIFI and then stupidly I plugged the ethernet cord in and the whole process started again.

I called Apple Support and the most help I got was - "Take to an authorized dealer" and have them repair it for you. I've tested cables, I've reset modems, I've manually restored ATV via iTunes and nothing seemed to have worked.

Currently, my ethernet cable is PLUGGED IN but the ATV is picking up WIFI -- which the Apple Support tech said is impossible to have both. So, my question is --- what is going on with my Apple Tv? Anybody heard of this before? Any ideas what to do?

I'd rather have my ATV running off my ethernet connection than WIFI but I'll take what I can get right now.