[ploxiln]

The problem is that the router does not drop packets (as soon as a proper traffic shaper does). It queues them up, megabytes at a time. Packets that do make it to their destination take longer and longer to get there (due to waiting in the queue).

Eventually most of the buffered packets are so late that they're considered missing/dropped, though they took bandwidth to send and caused other packets to wait behind them. Then TCP adjusts to a long series of lost packets by dropping the rate dramatically.

TCP isn't supposed to work that way :)