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Do I have to be on the internet to use the GPS?

No, if you use an application that has offline maps. Navigon, NDrive and CoPilot all do that. You can try for free, but all are paid apps.
 
You can also try MapDroyd. It is free, you do not have to be online, but it lacks real navigation. You can see where you are, but you can't plot directions. From place to place.

Their paid version NavDroyd does have this function.
 
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