It looks like it is downsampling the video or streaming after converting to another codec. Some codecs are fine for decoding on the server but the app may not support them so the server converts them. Some files are of higher quality than what the server is configured to deliver so it downsamples to stream it.
Check the configuration and look for anything to do with codecs, hardware decoding, streaming quality, and so on. It may also be on the app, so if you can access a different interface then test that to narrow down the issue.
Root your phone and you can manage which APN is used by tethering. If you can’t do this consider trying a connecting to a VPN before enabling tethering, the connection will on some devices remain active on the normal APN because changing would disconnect the VPN and keeping connected is higher priority than updating the APN. Also USB tethering and WIFI tethering may behave differently.
In the end this is a good argument for better regulation. When you buy a car they don’t get to extract more money from you because you drive out of state or use it for business. The fact that telecommunications companies have so much power and access to basically monitor what you are doing and bill accordingly is insane. You should pay for a service with a simple and clear contract and all this crap should be made illegal.