When the modem's Wi-Fi light is flashing while playing multiplayer on Xbox One, it typically indicates that data is being transmitted between the console and the internet. This can mean that the console is actively sending or receiving information, such as game data or updates. If the light is flashing excessively or if you're experiencing connectivity issues, it might suggest that the network is experiencing high traffic or instability. In such cases, checking your internet connection or restarting the modem may help.
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