Generally the router auto channel setting is only active at boot time. It also behaves poorly in most instances. Once the channel is "picked" the router will not change until next reboot. In the 802.11 WiFi protocols it is actually preferable to be on the same channel as another signal than on an adjacent channel, which is why experienced engineers will tell you to pick channels 1, 6, or 11 in the 2.4G band regardless of someone else using the channel. If two or more AP's are on the same channel they will "hear" each other at the MAC level and share the airspace more or less politely. If they are adjacent channels all you get is interference. Most router "auto select" routines just look for any unused channel, generally picking one between two used channels, which not only gives you lots of interference but introduces interference to the adjacent channels as well.
As far as the drops, do you have multiple AP's using the same SSID ? Roaming on WiFI isn't seamless unless the equipment is specifically designed and implemented to support it. A client will drop when changing AP's under most circumstances. (Since you mentioned working for an ISP this isn't an unusual configuration for a wireless ISP.) If your ISP is a hardline (DSL, Cable, etc) ISP and the drops are at the client WiFi router I would check your DHCP logs. A common issue is that DHCP renews don't get to the DHCP server until the lease expires, which causes a drop, then gets renewed and the service is restored. This is particularly common when the DHCP server is on a different IP subnet than the clients.