Mark Russinovich has written a very detailed blog post about the Vista media playback and network performance issue:

A few weeks ago a poster with the handle dloneranger reported in the 2CPU forums that he experienced reduced network throughput on his Vista system when he played audio or video. Other posters chimed in with similar results, and in the last week attention has been drawn to the behavior by other sites, including Slashdot and Zdnet blogger Adrian Kingsley-Hughes.

Many people have correctly surmised that the degradation in network performance during multimedia playback is directly connected with mechanisms employed by the Multimedia Class Scheduler Service (MMCSS), a feature new to Windows Vista that I covered in my three-part TechNet Magazine article series on Windows Vista kernel changes. Multimedia playback requires a constant rate of media streaming, and playback will glitch or sputter if its requirements aren’t met. The MMCSS service runs in the generic service hosting process Svchost.exe, where it automatically prioritizes the playback of video and audio in order to prevent other tasks from interfering with the CPU usage of the playback software.

Click here to read his full post or read the spoiler below:

The throttling rate Vista uses was derived from experiments that reliably achieved glitch-resistant playback on systems with one CPU on 100Mb networks with high packet receive rates. The hard-coded limit was short-sighted with respect to today’s systems that have faster CPUs, multiple cores and Gigabit networks, and in addition to fixing the bug that affects throttling on multi-adapter systems, the networking team is actively working with the MMCSS team on a fix that allows for not so dramatically penalizing network traffic, while still delivering a glitch-resistant experience.