SpaceX told the Pentagon it has been underpaying for the Starlink satellite connections guiding U.S. kamikaze drones over Iran, demanding a fivefold price increase that the Defense Department ultimately agreed to pay, according to Reuters.
SpaceX told the Defense Department it should pay $25,000 per terminal, up from $5,000, for the satellite links guiding LUCAS suicide drones over Iran
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SpaceX told the Pentagon it has been underpaying for the Starlink satellite connections guiding U.S. kamikaze drones over Iran, demanding a fivefold price increase that the Defense Department ultimately agreed to pay, according to Reuters.
In the weeks after the bombing campaign began, the gap between what the Pentagon was paying — roughly $5,000 per terminal — and what SpaceX believed it was owed became the subject of executive-level meetings, with company officials contending that actual usage reflected a service tier priced closer to $25,000, Reuters reported, drawing on unnamed sources and Pentagon documents. The dispute centered on LUCAS suicide drones — a low-cost U.S. loitering munition comparable to Iran's Shahed — which rely on Starlink's satellite network for guidance and targeting.
At issue was how to classify the drones' usage: SpaceX maintained that operational demands placed the LUCAS squarely in aviation-tier territory, a category that commands significantly higher fees than land or mobility plans. Defense officials countered that a $25,000 monthly charge made no sense for a weapon that connects to the network for only a short window before destroying itself, Reuters reported. Faced with ongoing strike operations and no viable alternative supplier, the Defense Department capitulated, accepting SpaceX's new pricing structure — a concession that pushed the per-unit cost of each LUCAS drone to nearly twice its original figure of around $30,000, Reuters reported.
The agreement did not settle the matter internally. Deputy Secretary of Defense Steve Feinberg was among senior Pentagon officials who remained uncomfortable with what had been accepted, and when fighting paused in April, Defense Department representatives used the ceasefire window to reopen the conversation with Terrence O'Shaughnessy — the retired four-star Air Force general now heading SpaceX's defense division — Reuters reported.
The Pentagon said its Commercial Satellite Communications Office is working to identify competing vendors. But no other provider currently offers a comparable alternative, according to Reuters. With a constellation of around 10,000 satellites representing more than 60% of everything currently circling the planet, SpaceX leaves competing low-earth-orbit projects — among them OneWeb and Amazon $AMZN's Project Kuiper — far behind in scale.
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