Foreign media reveals: Pentagon disputes with SpaceX over Starlink price increase

Reference News Network reported on May 29 Reuters published a report on May 26 titled "Pentagon Disputes with SpaceX Over Starlink Price Increase During Iran War," with the main content as follows:

As U.S. drones began to achieve results in the Iran war guided by Elon Musk's Starlink network, executives at SpaceX concluded that the Pentagon should pay a higher fee for access to its satellite wireless network.

According to two insiders and Pentagon documents reviewed by Reuters, weeks after the U.S. initiated bombing operations, SpaceX executives met with Pentagon officials and proposed that the military was paying about $5,000 for network access per terminal, while actually enjoying high-end services worth nearly $25,000.

Interviews with several insiders and related documents show that there were disagreements over the fees for accessing Starlink services for the "Low-Cost Unmanned Combat Aerial System" (LUCAS) suicide drones, which is one of the pricing disputes between the company and the Pentagon in recent months. LUCAS is a low-cost drone used by the U.S. military that can hover over a target area and dive to detonate.

These previously undisclosed ongoing disputes highlight the Pentagon's increasing reliance on the company, giving Musk greater influence in critical areas of U.S. national security. SpaceX is set to go public next month, which is expected to become one of the largest initial public offerings (IPOs) in history, and the company is seeking to increase revenue before that.

Unlike the civilian version of Starlink terminals available in supermarkets, SpaceX is providing the Pentagon with military-grade "Starshield" terminals under an agreement reached in 2023.

Insiders say that the latter can access both the commercial Starlink satellite network and connect to another set of higher-security "Starshield" satellite constellations.

SpaceX argued that the usage scenario for LUCAS drones aligns more with its aviation services tier rather than the lower-priced ground and mobile services. However, one source indicated that U.S. Department of Defense officials believe that the $25,000 monthly fee corresponds to conventional aircraft, not to suicide drones that only require short-term use of Starlink for a few minutes or hours.

At the time, the U.S. was intensifying its strikes against Iran, and the Department of Defense ultimately agreed to SpaceX's price increase request, which nearly doubled the related costs for a single LUCAS drone. Previously, the cost of each drone was about $30,000.

In response to Reuters' inquiries about the Starlink price increase and the Department of Defense's agreement to the price hike, the Pentagon declined to comment. A Department of Defense official stated that the office responsible for procuring these terminals is looking for other suppliers.

"The Department of Defense is committed to fostering a competitive environment in the commercial satellite communications sector," an official said.

However, currently, no other company can provide an alternative solution comparable to Starlink. Since the outbreak of the Russia-Ukraine conflict in 2022, the globally covering Starlink has become an increasingly critical tool in modern warfare, supporting battlefield communications and precision strikes even in remote areas. SpaceX operates about 10,000 satellites, accounting for over 60% of the total number of satellites in Earth's orbit.

The risks of dependence on Starlink were highlighted during the Ukraine war: Reuters previously reported that in 2022, Musk ordered the shutdown of Starlink services in parts of Ukraine while Ukrainian forces were attacking Russian positions, disrupting a key counteroffensive for Ukraine. Additionally, last summer, U.S. Navy tests were hindered by a global Starlink outage, causing unmanned military vessels to drift at sea.

Clayton Swopes, a senior fellow at the Center for Strategic and International Studies focused on national security, pointed out that unlike traditional defense contractors, SpaceX holds more leverage over the Pentagon because Starlink also has a large commercial market, as well as rocket launch and artificial intelligence businesses.

According to a document from the U.S. Securities and Exchange Commission, about 20% of SpaceX's total revenue comes from the U.S. government. (Translated by Zhu Li)