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You can talk to people from just the modem and also play from just the modem but a router is required if you want to have multiple devices connected to the internet at the same time. I play from a wired connection connected to my modem but i have little to no connection problems, but if you dis-connect the cord every time you finish playing you may have problems initialy connecting to the internet and xbox live.

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Q: Can you talk to other players on Xbox live with modem connection?
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