In the United States, we have two choices for ADS-B Out equipage available today - a transponder based system ("1090") or a Universal Access transceiver (UAT) system. For ADS-B In, traffic information is provided by the FAA on both links, but the FIS-B weather and other flight information is only available on UAT.
UAT Out is US only, and is approved for operations below 18,000 ft - so if you are flying outside the US or in Class A airspace, 1090 is your only option.
But for the majority of the US Light General Aviation (GA) fleet, UAT is a very good option - for technology, installation and functional integration reasons.
Transponders were new and exciting when they were introduced - as Interrogate Friend or Foe (IFF) systems in World War II. The basic architecture is unchanged since then - an aircraft transponder is a big AM radio, blasting radio waves into the spectrum at high power levels. The messages are not time dependent, and they trample all over each other, making it quite difficult for messages to get through. This is the heart of the 1090 spectrum concern that led to the introduction of UAT in the US airspace system. A 1090 ADS-B transponder is passing much more information than that of a basic Mode A/C transponder, and if all of the ~140,000 light GA in the US started transmitting those signals, the system would have a big problem.
UAT on the other hand is a modern, digital radio that uses time division multiplex (TDMA) to enable much higher message performance at much lower power levels. So a UAT radio is smaller, lighter and uses less power than a 1090 ADS-B radio. It also has growth potential both at the box level (these are modern telecoms devices) and at the infrastructure/spectrum level. As NextGen develops, UAT will be able to support the increasing number of applications that will appear - 1090 will not.
The ADS-B rules make the UAT system an easy avionics retrofit - and for the US piston fleet in particular, ADS-B equipage is going to be retrofit activity. UAT is a universal retrofit system, so for those aircraft flying below 18,000 feet, a UAT can always be added to the existing aircraft systems. If your old Mode A/C transponder works today, why not leave it alone and just add a UAT? If you are worried about it failing at some point in the future, there are ultra low-cost Mode A/C transponders in the market - and with UAT that is all the transponder you will ever need.
Function and Integration
What about ADS-B In? The UAT system has been designed from the ground up as an integrated ADS-B In / Out solution, so if you are thinking about a UAT receive capability to take full advantage of the ADS-B In free weather and traffic products, a complete UAT In/Out system is the best way to go - both ADS-B In and Out in can be included the same, compact box. Generally, transponder systems are not designed that way, and ADS-B In is something you will have to purchase and install separately. Unfortunately the 1090 datalink makes it difficult to combine ADS-B In and Out into a single box ...and in fact there are none on the market today.
There are however, situations where 1090 does make sense - it all depends on your aircraft's current equipage. For example, if you are in the process of building a new aircraft, a transponder is required. So - it could make sense to put a Mode S transponder and a separate, UAT receiver for ADS-B In. However, keep in mind that there are options for low-cost Mode A/C transponders on the market today, so a UAT ADS-B In and Out solution remains a viable option.
What about upgrading the transponder? Talk to your installer - this is quite possibly the least expensive option, but the thing to consider here is GPS integration. If you already have an ADS-B ready GPS installed, and it is compatible with your chosen transponder, this can be a good way to go.