Isn't space unfathomably gigantic:
Yes, but the space around our planet is more and more congested. Fifty years ago, era of space exploration began with just the US and Soviet Union, which were primarily going up there for military reasons. Nowadays, more than 50 countries operate as a minimum one satellite, and there are also all sorts of private entities conducting activities in space. We have a much better diversity in who is using space and for what that throws up various challenges.
Congestion causes problems in space:
We have all this stuff up there about 1,000 active satellites along with 21,000 pieces of debris greater than 10 centimetres and half a million pieces down to about one centimetre, all hurtling around at speeds of up to 25,000 kilometres an hour that means even the small ones are able of causing huge damage. Although space is massive just from here to the geostationary orbit 36,000 kilometres away, you are looking at trillions of cubic kilometres of volume; satellites and debris are concentrated in assured areas.
The second problem is another kind of congestion, this time of radio signals. All those satellites are communicating on radio waves other than there is a limited spectrum for that, just as your neighbours Wi-Fi hotspots compete for the similar spectrum as the one in your house. The geostationary orbit that is known as that because satellites in it move around the Earth at the equivalent speed as the Earth rotates and so appear not to move is particularly in demand. It is divided up into slots, so you don't have also many satellites interfering with each another's bandwidth, other than we are running out of slots, particularly over America and Asia. If you talk to satellite operators, they say the main threat they face is radio frequency interference, whether intentional or unintentional.
Issues are so much:
Space is woven into the fabric of everyday life in ways not many people realize. For example, GPS satellites have very precise atomic clocks on board which broadcast the time. It turns out that there are many of things that can benefit from actually accurate clocks, over the last couple of decades; they have been used not just for navigation except also to set time for everything from electrical power grids to financial transactions. You are not going to lose the whole signal overnight and work has been done on backups, however you are still looking at potentially widespread effects if there is a loss or degradation to that timing signal.
Debris poses a threat in space:
One is that the people who operate satellites increasingly have to get measures to stop them from possibly colliding with debris: in 2011 alone, there were about 150 such manoeuvres. Debris wasn't really considered to be an issue until 2009, while an active US satellite smashed into a dead Russian one, creating about 2,000 novel fragments. The difficulty is that we don't have technology to know for sure when two things are going to collide. The near misses don't get reported other than they are out there. The rate of these manoeuvres has also increased for the International Space Station that has six human beings on it at all times. Twice in the last year or so, warnings have come too late and the astronauts have had to put on their space suits and obtain into their escape vehicle currently in case.
In adding to satellites possibly interfering with each other, there is also issue of ground networks interfering with satellites. Just, an American company called LightSquared wanted to unit a new high-speed wireless service, using a frequency range very close to the one used by GPS navigation satellites. Everywhere they were going to put up their towers, it will have blocked out GPS signal in the local area. The US government finally prevented them from proceeding; however only after a protracted legal battle and this is not the only case. As the opposition for terrestrial bandwidth intensifies, there will be knock-on effects in space. After that there is the fact that anyone can go on the Internet and buy a GPS jammer for US$ 1,200. We have seen recent cases of the GPS used in airports going wonky since a truck driver who had bought the jammer to stop his company keeping tabs on him had pulled in for the sleep nearby.
These are both cases of unintentional interference. We have also seen intentional interference, whether it is Iran is jamming Eutelsat, French commercial satellite that beams down BBC Persia, or reports of the US military using a variety of techniques to jam or interfere with adversaries using satellite communications.
The situation if there is no space in space:
The worst case scenario is not that debris is going to make space unusable; it's just that it would become very costly to be in certain orbits. If the risk of losing a satellite is higher, you create the satellite stronger that costs money, or you launch more of them because one or more will fail. Though the business case for communications satellites beaming down the World Cup final will hold up, the scientific applications of space might not. Especially in this era of austerity, we see pressure on the utilize of satellites to monitor climate change, to predict the weather or keep track of war crimes.
How well prepared are we for this?
We have good quality guidelines for minimizing the formation of new debris that are increasingly being followed however the problem is the legacy of what is already up there. The modelling for the future is not good. We are most possible already at the point where there is enough stuff up there to keep generating more debris all by itself, as pieces of junk and hundreds of them are as big as school buses, keep colliding and creating fragments that go on to cause more collisions. The US military has a network for tracking this debris and providing warnings, other than there are huge gaps in its coverage since it was at first built for tracking Soviet missiles coming over the North Pole. There are other tracking capabilities operated by other countries around the world, other than there are a lot of challenges in cooperating with them.
The regularity problem is even harder to get a grip on. The International Telecommunication Union, which is part of the UN, has completed a pretty good job of allocating bandwidth slots, other than it does not have an authority to enforce how these slots are next used. No international organization does, with the possible exclusion, if it came to it, of the UN Security Council.