* German regulator orders changes to StreamOn option
* Says must comply with EU roaming, net neutrality rules
* Telekom offers zero-rated data to watch online videos
* Telekom to appeal the decision
* Says regulator's order would make product uneconomic
By Douglas Busvine
FRANKFURT, Dec 15 (Reuters) - Germany's regulator ordered Deutsche Telekom on Friday to offer an all-you-can-watch video product on the same terms throughout the European Union, in a decision the company slammed as "incomprehensible", saying it would appeal.
Telekom's 'StreamOn' option charges nothing for data used watching video-on-demand services and seeks to emulate the success of its T-Mobile US unit, which has gained on its rivals by providing Netflix "on us".
In its ruling, the Federal Network Agency (BNetzA) said Deutsche Telekom would have to make Stream-On available in compliance with the European Union's rules on roaming and net neutrality.
That would require Telekom to abide by the "roam like at home" principle, under which charges should be the same regardless of where the customer is in the European Union. Net neutrality means there should be no differential throttling of data speeds depending on location.
"Stream-On can continue to be offered by Telekom. In the interest of consumers, adjustments are necessary," BNetzA President Jochen Homann said in a statement.
"StreamOn must uphold the roam-like-at-home principle and customers must have access to video streaming in unrestricted bandwidth." Telekom has until the end of March 2018 to comply.
The ruling comes a day after the U.S. Federal Communications Commission voted to repeal net neutrality rules that entered force in 2015. The decision marked a victory for telecoms by making it easier for them to funnel customers to their preferred content partners.
Deutsche Telekom said it had signed up 700,000 customers for StreamOn, which is available as a free add-on to its MagentaMobil product range in Germany that costs between 30 and 70 euros ($35-$83) a month depending on the amount of data used for other purposes.
That number is growing by 20,000 a week.
"Today's decision is clearly directed against the interests of customers, because the economic basis of a free offering is being put into doubt," the company said. "For that reason, the regulator's decision is absolutely incomprehensible."
Telekom will examine how the ruling can be implemented while continuing to offer its StreamOn product.
"We see no reason to change our legal opinion and will therefore appeal," it said. "By taking legal action we will fight so that our customers can continue to use StreamOn while the legal situation is being clarified." ($1 = 0.8479 euros) (Reporting by Douglas Busvine; Editing by Adrian Croft)