You've got it.
I'm going to steal a link here that is actually for a different type of discussion (analog vs. digital signals), to give a visual look for those that learn visually...
http://utahvhfs.org/analog_dstar_spectrum1.gif
The signal on the left is an analog signal, the one on the right is a specific type of digital signal.
Don't worry about that right now. What you want to notice from this picture is that all transmitted RF signals have a center frequency (see that little point that touches the top of the screen on each signal) and "skirts"... all that stuff flowing down to either side.
Okay, remember those little men you cut out of paper in an accordion? Duplicate that left side picture and line 'em all up in a row on a big wide graph, left to right. (For the moment let's pretend those don't overlap or arrive at the receiver at different strengths... they all look exactly the same.)
Now take your copy machine and make one of those blobs 10X bigger (not an accurate number for the Lightsquared case, but close enough for the visual demonstration here) and put it equidistant to the last small one on the right side.
Where do the "skirts" from that big "mountain" go? They cover up a whole bunch of the signals on the right side of your receiver's passband.
Make sense?
The person that said Lightspeed is "operating in good faith" most RF engineers disagree with. The reason is... they KNEW their stronger signals from the terrestrial stations would do this.
What they're trying to do is jump through a loophole that defines this stuff like this, converted into "visual terms" from the picture...
If you mountain stays within X power levels (height of the mountain) and your "knee" in the graph is X number of dB down by X amount of frequency away, you're legal.
This is where the FCC botched, not just once (not protecting the GPS spectrum adequately since they've obviously also known how sensitive GPS receivers have been since GPS deployment by the military long before the public even knew about it), but they REALLY botched it when they granted Lightspeed the test licenses to even fire up those "giant mountains" right next to GPS.
Lightspeed knew they were trying to get away with it before anyone noticed. Unfortunately the folks who were supposed to notice, somehow didn't, and the first folks to really see it were the GPS receivers going blank. Unwanted interference.
I'm just a layman, not a pro and I'm amazed the pros missed this. There's a lot of things one could infer about what's going on at the FCC from seeing them make this gaffe, not the least of which is that they're undergoing a "brain drain" of traditional analog RF engineers for various socio-economic and political reasons.
Just for kicks... here's a report I sat on a committee in 2007 where we discussed where to put the "relatively new" digital radio systems in Amateur Radio spectrum in Colorado. Some of the folks on the committee are also pros in their "day jobs", and others are simply technologically interested Amateurs who volunteered to come up with policy. If a bunch of "dumb" Amateurs can do this... certainly FCC should be able to for the size of their budget. It says something about their priorities.
The first report:
http://www.ccarc.net/images/CCARC-Spectrum%20Committee%20Report-%20Rev%203.pdf
Which led to the second report:
http://www.ccarc.net/images/Second%20Spectrum%20Use%20Report-VHF.pdf
The issue above is not really "resolved" three years later. VHF spectrum in the Colorado Front Range is still jammed full. However, as things have gone on and off the air "naturally" some spectrum has been "carved" for digital systems over time and a few VHF digital systems are in operation.
In the case of GPS... it's not moving, and it's not going anywhere... so Lightsquared jammed up against it (pun intended, I guess), with high-powered terrestrial transmitters, just doesn't work from a purely technical standpoint.
Now that FCC already issued the temporary licenses, they painted themselves in a legal corner. That's the other problem going on here, as well as "influence" by big money supporters on both sides.
Ultimately -- in my opinion -- our government has shown throughout my lifespan that solid engineering takes a back seat to money interests, so that push-pull is at the core of this problem.
But I definitely disagree with the idea that Lightsquared "acted in good faith". They did not -- unless their RF engineers got their degrees from a Cracker Jack box. They knew, did the calculations showing they'd hammer GPS, kept those findings to themselves, and the execs decided to roll the dice. FCC helped them by granting them the test licenses terrestrially, who knows why?
Bad move. It set precedent that FCC was even interested in letting them try something that was easily known would be a real-world problem. My guess: A clerk somewhere looked up a set of procedures and followed them blindly, like any giant bureaucracy, without any knowledge of RF Engineering. A paper-pusher got FCC into the mess they're in, and now they'll try to get out by using the same "larger mountain" technique the RF spectrum interlopers are using, but their "mountain" will be paperwork... and committees... and more paperwork... and more.
Taxpayers have little idea about how expensive this will all be, that it could have been avoided, and will write it off as "the FCC doing their job" instead of being angry that FCC has gotten this whacked that they miss such obvious stuff and then spend years and tons of money cleaning up the mistake.
I never thought I'd see Nextel get a deal, but they did. Lightsquared probably will too. FCC could stop the whole thing by simply revoking the licenses and saying "no", but the lawsuits will fly at that point. Lightsquared is out to make money, either with their RF data system, or in court.
Now that FCC opened Pandora's box, they have to tread lightly... allow the "tests" to continue, control the conditions, document six-ways-from-sideways the effects of the transmitters, and then carefully cancel the test licenses and say "no" very gently. But they'll still get sued. As will the manufacturers of the "too sensitive" GPS receivers.
It's going to keep a lot of RF engineers and lawyers in a lot of money for a long time.