iPad 2: The Wi-Fi vs. 3G dilemma

March 9, 2011, 4:10 PM UTC

Do I buy an iPad 2 with 3G built-in, or will Apple’s Personal Hotspot do the trick?

Image: Apple Inc.

Okay, so I’ve decided to buy myself an iPad 2. The entry-level model I bought a year ago for $499 has served me well, but I’m getting pinched by the limits of 16GB, and I know a family member or two who would be delighted to take the old iPad off my hands.

Meanwhile, I’ve had my head turned by the Wi-Fi+3G iPad that Rupert Murdoch’s people loaned me for a few weeks last month to encourage me to read The Daily.

Suddenly I had an iPad I could use not just at home or at Starbucks, but anywhere within range of a cell tower — which in the Northeast Corridor is pretty much everywhere. I felt like a parolee who was finally allowed to take off his electronic bracelet and leave the house.

Getting the extra memory I need is easy enough, though it pains me to pay Apple (AAPL) $100 for a chip that probably costs them less than a quarter of that. But there are nearly a dozen different ways to get 3G cellular access, and that’s my dilemma — and maybe it’s yours, too.

For reference, you might want to consult the helpful pdf someone named Shane at TC Geeks has created. I’ve pasted a screen shot below that should open full size on a separate tab if you click on it.

Click to enlarge. Source: TC Geeks

The first decision I had to make is whether I wanted to pay the extra $130 to get a built-in 3G receiver. This might make sense for me if I were a commuter who spent a couple hours a day on a bus or a train. I know I’d want access to e-mail and the Web during my commute, and to get it without having to fire up a second device would be worth a lot to me.

If I went that route, I’d have to choose among the eight different AT&T (T) and Verizon (VZ) options laid out in Shane’s chart. He priced them out and determined that AT&T’s new post-paid plan was probably the best deal in terms of both cost and network speed. You can follow his reasoning here.

But don’t commute into New York from Westchester, Long Island or New Jersey. I work out of my home in Brooklyn, where the Wi-Fi signal reaches from the top floor to the leafy backyard. Nice as Rupert Murdoch’s iPad was, I’ve had occasion to take advantage of its 3G capacity only twice. Paying $729 for a 32GB iPad doesn’t make sense for me.

That brings me to the world of wireless tethering, which Apple has branded Personal Hotspot. Because I own an AT&T iPhone 4, this option will become available to me for an extra $20 a month as soon as Apple releases iOS 4.3 (which could be real soon now; see here). Although Apple hasn’t yet said when iOS 4.3 will be available for the Verizon iPhone, it’s had wireless tethering since January.

The advantage of the Personal Hotspot solution for me is that it gives me 3G access with a regular Wi-Fi-only iPad. Moreover, AT&T has announced that the option doesn’t require signing a new contract; I can pay for 3G access (and the extra 2GB of data usage it buys me) one month at a time.

The disadvantage is that it means juggling two devices, draining two batteries, and going through a non-trivial set-up procedure every time I want to use my iPad outside the house.

But for me, it’s worth it. And that’s what I’ve decided to do. Total cost: $599 for a 32GB iPad and an extra $20 on my monthly AT&T bill.

UPDATE: Several readers have pointed out that the Wi-Fi version doesn’t have a GPS chip, which could be deal breaker for people who use their iPad for navigation.

Also on Fortune.com:

[Follow Philip Elmer-DeWitt on Twitter @philiped]