It's very possible they are not bullshitting you. I don't know how it works with DSL, but I work for a major 3rd party tech support company that provides tech support for about 50 - 75 cable MSO's (Multiple service operators). The way it works on a cable network, all the cable modems connect to...
If you really wanna test it, go into 1st person view and stare at the ground. You'll get a constant fps that way. If you get any hard drive activity with nothing new coming onto the screen, then you may have a program accessing your hard drive.
Have you ever looked at your hard drive light while in areas where there are a lot of different characters? the hard drive goes crazy. This is in addition to latency involved from getting information from the server. It's mostly the hard drive on systems that cause the slowdown though, because...