Lacking real competition, the company won the showdown.
The Iran war has demonstrated the US military’s inability to be cost-effective. To make matters worse on that front, SpaceX is now reportedly using its market leverage to pressure the Pentagon into spending more on satellite internet.
The disagreement between SpaceX and the Pentagon was reported by Reuters on Tuesday. Weeks after the US military began its campaign against Iran, SpaceX executives reportedly met with Department of Defense officials to talk about pricing. The message from Elon Musk’s company was essentially: You’re paying about $5,000 per Starlink terminal monthly, but you’re using it like a higher-tier aviation subscription that costs $25,000 per month. Time to upgrade.
The Pentagon’s conflict with SpaceX arose over its use of the service with the LUCAS kamikaze drones. In their meeting, DoD officials reportedly argued that the more expensive aviation-grade Starlink
service was designed for aircraft, not one-way drones that detonate on impact. This type typically requires only a few minutes to a few hours of satellite connectivity. The Pentagon reportedly caved, essentially doubling the cost of each LUCAS drone.
And all of this is happening as SpaceX prepares for its IPO in June, expected to be the largest in history.
Starlink’s military-grade version, Starshield, has increasingly become a critical tool for global defense forces. For instance, experts began describing Ukraine as gaining an advantage in its war with Russia after SpaceX began blocking the latter’s use of the service.
A DoD spokesperson told Reuters that the agency is shopping around for Starlink competitors. Unfortunately, it may need to travel to another galaxy to do so (perhaps with an assist from SpaceX). Musk’s company is the only game in town that operates at this scale. Reuters notes that SpaceX’s roughly 10,000 satellites make up over 60 percent of the global total in orbit. Neither of it’s closest competitors, Amazon Leo and Eutelsat OneWeb, is ready to compete on that level.