The most likely reason is that there is not an internet signal in the ethernet cable. Try plugging it into the PC and see if it actually works. Also check your connections they should click when properly inserted into the connection on both ends. You can also try removing it from the router and plugging it into the modem to see if the router is the problem
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you plug it in at the back of the ps3
No, while an ethernet cable plug looks like a phone jack cable plug it is actually larger. The PS3 can not be connected to the internet with dial up internet service and an ethernet cable is meant to be connected to a modem or router.
If for instance you have a PC connected to the internet with an ethernet cable at a cable modem you can unplug the ethernet cable to the PC at the modem and Plug in a ethernet cable from the PS3 to the modem and a connection to the internet is possible. If the PC and PS3 are close enough you can just unplug the PC ethernet cable at the PC and move it over to the PS3. The first time you do this you need to go to the PS3 network setting and auto set the network settings. When you are done using the PlayStation 3 you just unplug the ethernet cable for the PS3 from the modem and plug the PC cable back into the modem for the PC to go back online or switch the cable back if it was close enough. When you get tired of doing this just purchase a router and plug the PS3 and PC into the router and plug the router into the modem.
You plug an ethernet cable into the back of the PS3 into what looks like a large phone jack
Either a Cat 5 or Cat 6 ethernet cable will fit the PS3 ethernet outlet. You must also have something to plug the cable into that is connected to the internet, for instance a router or modem.