Hardware Issues
Hardware problems can affect the Xbox 360's connection to the Internet and cause "Halo 3" lag. Checking hardware when lag occurs often will help you determine whether the connection issues are Internet or system related. Turn off and unplug the Xbox 360 console and modem for at least 30 seconds. Plug the Xbox 360 and modem back in, and restart your systems. When the Xbox 360 is back on, you may receive a prompt to download a system update.
Xbox Connection Settings
Test the Xbox 360 connection settings by pressing the round "Guide" button on the Xbox 360 controller and scrolling to "Settings." Select "System Settings," and choose "Network Settings" from the menu. Select your chosen network (wireless or wired), then select "Test Xbox Live Connection." The test will sign all users out of Xbox Live and check the Internet connection for possible issues. If the test encounters connection issues, you will receive a message explaining the problem and providing instructions for fixing the issue.
Internet Speed
Slow Internet speeds cause "Halo 3" lag during game play. Third-party websites let Internet users check Internet speed for free. However, contacting the Internet service provider directly will provide you with a more accurate estimation of your Internet speed. If the Internet service provider discovers a slow connection, it can help you reset the modem and identify the reason for the slow speeds.
Interference
Electronic devices that share the Xbox 360's Internet network or use a cell phone carrier's network can interfere with a "Halo 3" connection. Move cell phones using a network to another room, and place the Xbox 360 closer to the wireless router (if using a wireless connection) to minimize interference. Also stop any downloads or streaming on computers and devices using the same Internet connection as the Xbox 360.