A growing dispute has erupted between the Pentagon and SpaceX after Elon Musk’s satellite company reportedly raised Starlink connection fees fivefold for U.S. military drone operations during the war with Iran, underscoring concerns inside Washington over the company’s expanding control over critical defense systems.

According to a Reuters report, tensions escalated after American kamikaze drones operating against Iran relied heavily on SpaceX’s Starlink satellite network for communications and targeting.

As the military campaign intensified, SpaceX informed Pentagon officials that the pricing structure being used for the drone operations no longer reflected the level of service being consumed.

Sources familiar with the negotiations and Pentagon documents said SpaceX executives argued that the military had been paying approximately $5,000 per terminal while effectively utilizing a service tier valued closer to $25,000.

The disagreement centered largely around the use of Starlink aboard LUCAS suicide drones, low-cost American unmanned aircraft designed similarly to Iran’s Shahed drones.

The drones are capable of loitering above target zones before crashing into their targets and detonating.

SpaceX maintained that the drones’ operational profile more closely resembled the company’s aviation-level subscription service rather than its cheaper land-based or mobility plans.

Pentagon officials pushed back, arguing that the $25,000 monthly aviation pricing was intended for traditional aircraft and not kamikaze drones that may only remain connected to the network for short periods of time.

Despite those objections, the Pentagon ultimately accepted the higher pricing arrangement.

The increase reportedly nearly doubled the total cost of each LUCAS drone, which had originally been priced at roughly $30,000 per unit.

The pricing battle is only one part of a broader series of disagreements between the Pentagon and SpaceX.

Defense officials have also reportedly clashed with the company over proposals to provide civilians inside Iran with direct-to-cell Starlink communications access similar to 5G service, allowing users to bypass internet and communications shutdowns imposed by the Iranian regime.

The disputes have highlighted how increasingly dependent the U.S. military has become on SpaceX infrastructure, giving Musk and his company growing leverage over major national security operations.

The issue comes as SpaceX reportedly prepares for a possible initial public offering next month that could become one of the largest IPOs ever.

Unlike consumer-facing Starlink systems, the Pentagon operates a military-specific platform known as Starshield under a 2023 agreement with SpaceX.

Starshield terminals are capable of connecting both to the commercial Starlink network and to a separate secure satellite constellation also known as Starshield.

Clayton Swope, a senior fellow at the Center for Strategic and International Studies, said SpaceX’s leverage stems partly from the fact that it is not solely dependent on government contracts.

In addition to its military work, the company maintains major commercial operations involving satellite internet, rocket launches, and artificial intelligence technologies.

According to SEC filings, approximately 20 percent of SpaceX’s total revenue comes from the U.S. government.

“SpaceX certainly has the U.S. government over the barrel,” Swope said.

Frictions reportedly surfaced almost immediately after military operations against Iran began on February 28.

On March 1, Elon Musk responded on X to an image showing a LUCAS drone apparently equipped with a Starlink terminal.

“It is a violation of commercial Starlink terms of service to use the terminal for weapon systems. This applies to all users and is shut down when discovered,” Musk posted. “There is a separate network called Starshield, which is operated by the US government.”

{Matzav.com}