While on one hand the US government is embroiled in a war with Iran, on the other hand the US Defense Ministry is embroiled in another front with the world’s richest businessman and SpaceX owner Elon Musk. In fact, Enel Musk’s SpaceX has increased the prices for internet used in the war zone by up to 5 times. Due to which the tension between the company and the Pentagon has increased considerably.
According to Reuters report, as soon as American kamikaze drones guided by Elon Musk’s Starlink network started making gains in the war against Iran, senior SpaceX officials demanded more money from the Pentagon for the use of their satellite Wi-Fi network.
Within weeks of the US beginning its bombing campaign, SpaceX executives met with Pentagon officials and argued that the military was paying about $5,000 for each terminal connection, when in reality they were using the service for as much as $25,000.
According to Reuters report, this ongoing dispute over the use of Starlink on the LUCAS suicide drone is a part of the increasing tension between SpaceX and the Pentagon in recent months over the prices of Starlink. Pentagon wants to provide network to Iranian citizens on their mobile phones. In which SpaceX is helping. This service will be like 5G, which will connect the mobile phones of Iranian people to the network. To implement this plan, there is a dispute going on between SpaceX and Pentagon regarding the prices.
What is the military version of SpaceX?
Unlike Starlink terminals available to the general public at stores like Walmart, SpaceX sells a special military version called ‘Starshield’ to the Pentagon. Its deal was done in 2023. Starshield terminals can connect to both a common Starlink satellite and a separate one. SpaceX argued that the LUCAS drones were operating under conditions more consistent with their ‘aviation tier’ membership, rather than low-cost ground or mobile service. According to one of the sources, Pentagon officials argued that the $25,000 price – a monthly fee – was set for airplanes, not kamikaze drones that use the Starlink connection for only a few minutes or hours. The Pentagon, which had been escalating attacks on Iran, finally agreed to pay the increased price by SpaceX. This almost doubled the price of each LUCAS drone. Earlier the Pentagon was paying about $30,000 for each unit.
Pentagon is looking for another company
According to Reuters report, SpaceX did not comment on this matter. The Pentagon declined to comment on a Reuters report that SpaceX had raised its prices, or whether the Pentagon had decided to pay the increased prices, or whether there were any plans to provide Starlink cell service to Iranian citizens. In a statement, a Pentagon official said the department that will buy the terminals, the Commercial Satellite Communications Office, is looking at other companies. But no other company offers any option like Starlink.
Starlink has become a very important weapon in modern warfare after Russia’s attack on Ukraine in 2022. This satellite network provides coverage all over the world, making it possible for communication on the battlefield and precise targeting even in remote areas. SpaceX has approximately 10,000 satellites in the sky. Whose total share is more than 60 percent. Whereas the satellites of other companies like OneWeb and Amazon Leo are very less.
The risks of dependence on Starlink first came to light during the Ukraine War, when Musk ordered Starlink service to be shut down in some parts of the country in 2022. At that time, Ukrainian forces were moving towards Russian positions, and due to this an important counter-attack was disrupted. U.S. Navy trials were also disrupted last summer when a global Starlink outage left unmanned military boats out of contact, leaving them stranded at sea.
US government came under pressure from SpaceX
Clayton Swope, senior fellow at the Center for Strategic and International Studies, a think tank focused on national security, said in a Reuters report that SpaceX has more clout over the Pentagon because, along with its rocket launch and artificial intelligence business, it also has a large commercial market for Starlink. According to information submitted to the SEC, SpaceX earns about 20 percent of its total earnings from the US government.
By the beginning of the Iran War, Starlink had become an important part of US military operations. During testing and initial deployment, it supported a variety of systems—from drones such as LUCAS to unmanned aerial vehicles used for maritime surveillance and strike missions. According to a source familiar with the matter, when the US began its bombing, Starshield terminals were being used in more than a dozen drone systems.
But, soon after the US launched an attack on Iran on February 28, tensions arose between the Pentagon and SpaceX. On March 1, SpaceX chief Elon Musk responded to a user’s post on ‘X’ (formerly Twitter). The post contained a picture of a LUCAS drone, about which it was said that “it appears to have a Starlink terminal attached to it.”
Musk posted that using this terminal in weapons systems is a violation of Starlink’s commercial ‘Terms of Service’. This rule applies to all users, and is turned off whenever it is detected. There is a separate network, named Starshield, and it is operated by the US government.
A Pentagon official, in a statement to Reuters, denied any violation of the agreement with SpaceX. In the days that followed, SpaceX executives met with Pentagon officials and argued that the military was paying them less for the service, two sources familiar with the matter said in a Reuters report.
Considering new deal with SpaceX
One of the sources said that, although the Pentagon had initially agreed to pay higher fees for satellite Wi-Fi connections used by attack drones, many senior officials, including Deputy Secretary of Defense Steve Feinberg, were uneasy about the arrangement. Pentagon officials met with Terrence O’Shaughnessy during a ceasefire in April. Terrence O’Shaughnessy is a retired four-star Air Force general and now leads SpaceX’s defense business. The purpose of this meeting was to reconsider the prices.
Nevertheless, the Pentagon is currently considering purchasing an additional 3,500 Starshield terminal subscriptions, according to Pentagon documents seen by Reuters. These also include 100 subscriptions of the higher priced aviation tier. This deal could generate millions of dollars in annual revenue for SpaceX, although Reuters could not ascertain whether a deal has been finalized, or what price is being negotiated.
Pentagon upset by SpaceX’s prices
Starlink has proven to be very important for other operations as well. In January, when Iran cracked down on protests and killed thousands of people, the Trump administration secretly shipped more than 6,000 Starlink terminals to Iran to provide internet access to citizens. This was first reported by the Wall Street Journal.
However, as the war escalated, Iranian authorities seized those terminals and installed jamming devices to disrupt connections in major cities. Within a week of the conflict starting, Pentagon officials had begun talks with SpaceX about launching a ‘direct-to-sale’ service, two people familiar with the matter said. With this service those obstacles could be bypassed. This capability is similar to 5G connection, allowing users to connect even without terminals on the ground.
SpaceX had earned revenue of $11.4 billion from Starlink in 2025. According to a person familiar with the matter and Pentagon documents, SpaceX had proposed charging up to $500 million to launch the capability and $100 million per month to operate it. Seeing this price, defense officials became worried.
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