Owners of Apple's new iPad 3G are discovering that not all video streaming is created equal. While the software on the cellular-enabled tablet is the same as that on its WiFi-only sibling, playback through Netflix and YouTube is significantly lower in quality when streamed over a AT&T 3G connection rather than via WiFi. The reason, we're told, is that Apple implemented low quality stream rules for the HTTP Live Streaming functionality in iPhone OS, intended to minimize the impact on the 3G network.
"You must include a low quality stream of no more than 64 Kbps for your app to resort to when network conditions demand it, along with the higher quality streams you want to deliver to your customers when the network can support it." Apple
That, in combination with the larger iPad display, makes for a disappointing viewing experience. Other apps, such as ABC's Player, lack 3G support altogether, only allowing for streaming over WiFi. It's a good reason to buy a MiFi-style portable router, which is recognized as a WiFi connection by the iPad and thus works around the software limitations.
Of course, at the end of the day it doesn't particularly matter to iPad 3G owners whether it's Apple or AT&T putting the limitations in place: either way, the end result is the same. Apple could change the rule, but whether AT&T would then be happy with the outcome remains to be seen (or whether their network could handle the extra bandwidth use).