A local area network includes computers and peripherals networked in a high-speed LAN with access to a WAN through a slower connection via a broadband modem. A LAN gateway device manages data traffic between the local computers and peripherals and between the LAN and the WAN. The LAN gateway device provides multiple features, such as wired or wireless links, security, firewall, NAT, DCHP, traffic management, and the like. Traffic management features include an automatic quality of service priority classification scheme. A quality of service module automatically assigns priorities to the data streams based on analysis of the data packets. A configuration access list can be provided with pre-configured priorities for some streams. Initially, all streams are given highest priority and subsequently the priority is automatically adapted to the results of the packet analysis. Traffic shaping techniques control the LAN gateway upstream output and enable IP fragmentation of TCP packets according to measured upstream channel conditions.