E1200 speed issue - only when wifi download from internet

Hi,
I have a brand new E1200 router and I'm very disapointed with the speed I get.
The E1200 is connected to a Motorola SB6120 cable modem, connected to comcast.
I'm doing a couple of test using speedtest.net, and a couple of file transfers test between laptops on my network:
1) Laptop ethernet connected directly to the SB6120 modem. Speeds are around 34Mbps Down, 6Mbps Up which is what I expect.
2) Laptop ethernet connected to E1200, E1200 connected to SB6120. Speeds stays around the same (so far so good).
3) Laptop connected to E1200 through wifi. Thats when I get issue: Speed Down <1Mbps, Up is still around 6Mbps. 
4) 1 Laptop, connected to E1200 through wifi, another laptop connected through ethernet. Transfer speeds about 48Mbps (thats about what I expect good). E1200 still connected to Modem.
5) 2 laptops connected to E1200 through wifi, transfer speed about 25Mbps (half of the previous test, sound about right too). E1200 still connected to Modem.
So basically:
- Wifi to Wifi : Good
- Wifi to Internal Ethernet: Good
- Internal Ethernet to External Internet: Good
- Wifi to External Internet: BAD
Before I return this router and try another one, what the h** is going on here ? I can understand bad wifi connection, but not in
this manner.
I should mention that I see a lot of extra ARP traffic coming from the modem and Comcast network, but that's a fairly low rate (~10Kbps) and not a problem when I'm doing ethernet to internet speed tests, so I dont think thats the problem.
Thanks.

Try to do the following steps:
A] With the help of Cisco Connect Software (if at all you have installed the router with the help of this software)
1] Open the software and go to the option which says "Router Settings"
2] Then click on the option which says "Advanced Settings" which will take you to the router's configuration page.
3] Lower the MTU (Maximum Transmission Unit) from 1500 to 1400 or less (usually found on your router's main/ basic setup page)
4] Then go to the Wireless tab, keep network mode as mixed,
For Channel Settings of 2.4 GHz you can make Channel Width to 20 MHz only and Channel to 6, 9, 11..
For Channel Settings of 5 GHz you can make Channel Width to 20 MHz only and Channel to 40 or 161...
B] If you haven't installed Cisco Connect then you can log on to the router's user interface using it's default IP address in the browser which is 192.168.1.1 and type in 'admin' as the password leaving the username field blank. This will take you to the router's web interface and then follow steps as mentioned above to make the changes.
Now check the connectivity status.

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