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It might be a bit mystifying to some as to why someone might want to jam a GPS signal. However, there are those with a particular need for privacy, be it to massage their paranoia, keep law enforcement from engaging in warrantless car tracking, take an unauthorized lunchbreak with a GPS enabled company car, or a teenager not wanting their parents to track their GPS phone. Whether this is all legal or not is an entirely other question.
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How They Work: The Basics
The basic purpose of a GPS signal jammer is to prevent GPS loggers from either receiving satellite signals, or sending signals back to their base station. Now, chances are, any GPS you will have contact with use the radio frequency set aside from civilian use: military units use a very different frequency.
The GPS signal jammer works by sending out its own signal on the same frequency as the GPS unit, a noisy signal that prevents it from receiving or transmitting any useful information. There are a number of types of noise signals it can send; some call for a narrowband Gaussian signal, others for a simple continuous wave.
GPS signals are quite weak, being distributed out across the surface of the Earth by satellites high in orbit, so out of all the signals to jam, they're among the easiest to do so.
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GPS signal jammers come in a variety of designs, each suited for slightly different uses. The first, and most popular model to hit the mainstream market was one that plugs into the cigarette lighter of a car, effectively disrupting the signal for a 15 foot radius. Not enough to disrupt signals from other cars, but enough to keep you in a cone of GPS jamming silence. However, other versions that are battery powered and are effective to different distances, are also available.
Of course, you don't necessarily need to buy one—you can make one yourself with a little know-how. The most notorious guide is one posted by Phrack magazine, which has set the US government on track to determine the legality of these devices now that the ability to make them is widely available to civilians. (This guide by Phrack magazine also has some pretty detailed technical information on how they work, if you want more than a layman's explanation.) Here is a link to another DIY guide with better pictures and more detailed instructions.
Of course, terrorists fighting on the ground in Afghanistan and other countries also make use of GPS signal jammers, some Russian made. Obviously, you can't get a hold of these too easily.
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However, just because you have a GPS signal jammer doesn't mean you still can't be tracked. The models intended for cars, for instance, only work while the car and thus the GPS signal jammer is powered on. And you can still be tracked by your mobile phone's own signals if you don't take precautions.