Elon’s SpaceX wants Trump’s Pentagon to pay $25k per Starlink terminal instead of about $5k

SpaceX wants the Pentagon to pay a lot more for Starlink service on U.S. kamikaze drones being used in the war with Iran.

The fight started after American drones guided through Elon Musk’s satellite internet began getting results in the campaign, and SpaceX officials told defense officials the military was paying around $5,000 per terminal for a service tier they priced closer to $25,000.

The drones at the center of the fight are LUCAS suicide drones, a cheaper U.S. system built to wait over a target area, then dive into it and explode. They are often compared with Iran’s Shahed drones.

According to Reuters, SpaceX told the Pentagon that LUCAS was using Starlink like an aircraft service, not a regular land or mobile plan. Pentagon officials argued that the $25,000 monthly aviation fee was built for planes, not drones that only need satellite internet for minutes or hours.

SpaceX charges more as LUCAS drones use Starlink during Iran strikes

In response to the increased attacks against Iran by U.S forces, the Pentagon agreed to purchase Starlink at the increased rates. Consequently, the cost of acquisition for each drone shot up due to the Starlink costs, which previously sold at $30,000 per unit. The cost of purchasing the drones was more than doubled by the increase in Starlink costs.

The pricing fight is bigger than LUCAS. SpaceX and the Pentagon have been arguing over Starlink costs for months. Another dispute involves a U.S. plan to help Iranian citizens get around government internet blackouts through Starlink direct-to-cell service. That service would work more like 5G on phones, without the usual ground networks that Tehran can block or shut down.

One Pentagon official allegedly said the Commercial Satellite Communications Office, which handles the terminal purchases, is trying to find other companies that can provide similar service.

That search has one obvious problem. No rival currently matches Starlink’s reach. Since Russia invaded Ukraine in 2022, Starlink has become a major tool for battlefield internet, drone links, and targeting support in places where normal communications are weak, jammed, or destroyed.

Pentagon looks for Starlink rivals while SpaceX controls the larger satellite network

SpaceX sells the Pentagon a military version of Starlink called Starshield under a 2023 deal. It is different from the consumer Starlink kits sold through retailers such as Walmart (WMT). Starshield terminals can use normal Starlink satellites and a separate secure Starshield network.

It is hard for the Pentagon to dismiss the size of the constellation that SpaceX has created. It has put more than 10,000 satellites in orbit. This means that there are about 60% of all operational satellites in space.

The Iran war also kept moving while the pricing fight played out. U.S. forces carried out “self-defense” strikes in southern Iran early Tuesday local time. US Central Command said the action was meant to “protect our troops from threats posed by Iranian forces.”

CENTCOM spokesman Tim Hawkins said the targets included Iranian missile launch sites and boats that were trying to place mines. Tim added, “U.S. Central Command continues to defend our forces while using restraint during the ongoing ceasefire.”

U.S. President Donald Trump said Monday that talks with Iran were “proceeding nicely.” Trump also warned that “it will only be a Great Deal for all or, no Deal at all,” and said fighting could go “Back to the Battlefront and shooting, but bigger and stronger than ever before.”

U.S. Secretary of State Marco Rubio, speaking from India, said the Strait of Hormuz must stay open “one way or the other.” Marco said a deal with Iran could take a few days. Fox News cited senior U.S. officials saying the deal was “95% there.”

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