Looks like certain iPad apps are dramatically scaling back or even blocking the video altogether when on the 3G-ready iPad, according to some new owners. The YouTube app significantly degrades the quality of video, while ABC’s TV viewer doesn’t allow video at all unless via Wi-Fi. Only a few apps, such as Netflix, appear to work normally.
It was suspected that AT&T had demanded the limits, but an AT&T representative has denied the carrier’s involvement. Apparently the policies are so far self-imposed. ABC is allegedly prevented from streaming over 3G due to rights issues, while YouTube is most likely emulating the same bitrate scaling seen on the iPhone, with the larger screen size magnifying the drops in quality.