I have a FRITZ!Box Fon WLAN 7140 Annex A, Firmware version 39.04.34
I also found that I had dropped calls but after upgrading both the quality and the reliability improved. Seeing your post made me check if I was running the most upto date software and it's moved up to 39.04.37 now within perhaps two months.
I guess by your firmware reference that you were using a different model. I don't think my phone line is very good quality either. Sorry to hear of your experience, but I hope that others won't dismiss Fritz!Box as a result.
What is interesting is that you found it worked better behind a router. You don't mention what model you used. I tried it with a Belkin and couldn't get it to work.
Colin
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