Ok let me say first that this is just a dead simple Lag Switch, ill add some little extras at the end for those who have more than just scissors and the Ethernet cable.
This works best in games like SC2 where you can cause the entire game to pause for all players for up to 60 seconds (be sure to put it back on before then or else your dropped). There may be other uses but this is the only confirmed one i know of. There was something about if you use it while your the host in a FPS game that all other players will be still or something and you can shoot them but you have to look that up yourself.
Scissors, Box cutter or anything else to cut with (Needed)
Ethernet Cable (Needed)
Ok so lets start
1. Cut the cable down the middle in the center (anywhere is ok really). Now pull out the orange wire until you have a good amount out to work with.
2. You should now have about 2 inches of the orange wire to work with. Now cut the section of he orange wire that you pulled out in the middle and strip both ends of the orange insulation until you just have the copper wire.
3. Now your done, you can twist and untwist the 2 sides of orange wire at will which will cause you to lose connection until you twist the sides back together.
Extras. You can take both ends of the orange wire after you have stripped it and attach them to a switch, this can be a light switch or one of those little ones you find in radio shack.
If you do this with a small switch though be sure that the 2 ends dont connect on accident, i had this problem until i put a small piece of cardboard in between both sides of where the wires connected to the switch.