For aviation users, this is a big deal
"Garmin might have demonstrated interference is possible (pdf showing who and how), but it ranks pretty low on the things to worry about."
Err, no. Try again.
For a lot of airports, the approved IFR approach (in clouds, can't see out the window) is a WAAS GPS approach. Apparently Garmin did a test with their GNS 430W that showed that Lightsquared's proposed trsanmitter can cause the 430W to fail. And if you're on approach, this means you (at the very least) have to break off the approach and try the whole thing again... from maybe a couple hundred feet above the ground... or (at the very worst) you lose situational awareness and die.
It's also worth mentioning that the NextGen air traffic control system is pretty much going to be built on GPS - how many "ATC freakouts" do we want to deal with when a bunch of blips on the controller's screen suddenly show "no position or speed info available"
I have heard (from Lightsquared themselves) that their mitigation plan involves installing filters on affected GPS receivers. For aviation that means the filter needs to meet a TSO (that isn't written yet), be approved by the FAA, the installation probably would need to be STC'ed, and then the actual filter installed properly by an A&P mechanic. It's fair to say that there's hundreds of thousands (if not millions) of dollars in paperwork there for the TSO and various STCs, plus at least a couple hundred dollars per airplane. Who is gonna pay for that?
Cheaper stuff is great, but if they really need any part of that satellite spectrum for "a tiny fragment of its (LightSquared) traffic to be satellite-routed," then they need a new plan.