SpaceX has pressed the United States Department of Defense to significantly increase what it pays for access to its Starlink satellite network, as Elon Musk’s space company becomes more deeply embedded in America’s expanding drone operations in the Iran conflict.
According to sources familiar with the discussions and Pentagon documents reviewed by Reuters, senior SpaceX officials recently told Pentagon counterparts that the military is underpaying for Starlink connectivity used in combat operations.
The company argued that the Pentagon has been paying roughly $5,000 per terminal connection, while effectively using a higher-tier service valued at around $25,000 per unit.
The dispute comes as U.S.-guided kamikaze drones, powered in part by Starlink connectivity, have reportedly gained ground in operations against Iranian targets.
The drones, including low-cost LUCAS suicide systems similar in design to Iran’s Shahed model, are capable of loitering over targets before striking on impact.
The pricing disagreement is part of broader friction between SpaceX and the Pentagon over the use and cost of Starlink in military applications, sources said.
Tensions have also emerged over plans to expand Starlink-based direct-to-cell communications aimed at enabling Iranian civilians to bypass government-imposed internet restrictions.
The Pentagon is said to be exploring the system as a 5G-like emergency connectivity tool, but has clashed with SpaceX over proposed pricing structures.
Unlike consumer Starlink kits sold at retailers such as Walmart, SpaceX provides a military-grade variant known as Starshield to the Pentagon under a 2023 agreement.
According to a person familiar with the arrangement, Starshield terminals are designed to connect not only to SpaceX’s commercial Starlink constellation but also to a separate, more secure satellite network operated under the Starshield program.
At the centre of the dispute is how to classify the use of Starlink connectivity on LUCAS drones.
SpaceX has argued that the systems operate under conditions more consistent with its higher-priced aviation subscription tier, rather than cheaper land or mobility plans.
