It could be your network setup or it could be pronlems with Youtube app caching
you can try this fix posted by smkite
over at Android Central:
Here is the fix that worked for me. I contacted Google Play who then referred me to Asus last night. Asus had me basically "uninstall and re-install" the Youtube app. Below are the steps:
1.) Select "SETTINGS" for your Nexus 7.
2.) Select "Apps".
3.) Swipe from right to left until the "ALL" apps heading is visible.
4.) Scroll down to the Youtube app and select it.
5.) Select "Force stop".
6.) Asus was going to have me select the "uninstall updates" button, but the choice was not available on my device.
7.) Select "Clear data".
8.) Select "Clear cache".
9.) Now hold down the Nexus 7 power button for 15 seconds. (I believe the device powered off, on, off, and back on again.)
What's important is that the device has to be immediately rebooted after steps 1-8. I had read somewhere else about clearing the Youtube data and cache and tried it, but I had never rebooted the machine afterwords. The buffering issue remained until I did steps 1-9 immediately after each other.http://forums.androidcentral.com/google-nexus-7-tablet-forum/201236-problem-streaming-video-nexus-7-a-3.html#post2547309