Starlink Delivers on the Battlefield — Then Triggers a Price War

Starlink has proved its worth in combat. But winning on the battlefield has opened a bitter new front — this time between Elon Musk's SpaceX and the US Pentagon over who pays what. SpaceX insists the Pentagon has been enjoying a premium service at a bargain-basement price.

Foreign media, citing informed sources and internal Pentagon documents, reported that SpaceX executives met Pentagon officials face to face shortly after the United States launched its bombing campaign against Iran. Their message was blunt: the US military was paying roughly US$5,000 per terminal connection for a service actually worth closer to US$25,000 — a fourfold gap.

This row did not erupt overnight. For months, the two sides have been grinding away at each other over Starlink's use on LUCAS kamikaze drones — low-cost American weapons reverse-engineered from Iran's Shahed-136, designed to loiter over a target before diving in for the kill. Beyond drone pricing, the two sides have also failed to agree on the cost of direct-to-cell services.

Under a 2023 agreement, SpaceX supplied the Pentagon with the military version of its system — "Starshield" — not the consumer-grade Starlink terminals sold at stores like Walmart. Starshield terminals, according to people familiar with the matter, can connect to both commercial Starlink satellites and a separate, more secure military satellite constellation that also carries the Starshield name.

SpaceX argues that the combat environment in which LUCAS drones operate should qualify for an aviation-tier subscription, not the cheaper ground or mobility-tier rate. The Pentagon pushed back hard. The US$25,000 monthly rate, it said, was designed for manned aircraft — not for kamikaze drones that connect for only a few minutes to a few hours at a time.

In the end, the Pentagon blinked. To keep the strikes against Iran going, it accepted SpaceX's higher pricing. The consequence was immediate: the unit cost of each LUCAS drone nearly doubled, climbing from roughly US$30,000 to close to US$60,000.

Reuters put its finger on the deeper issue. These disputes reveal just how dependent the Pentagon has become on SpaceX — and how much leverage that dependence hands to Musk on matters central to US national security. The timing matters too: SpaceX is preparing for an IPO next month that could rank among the biggest listings in history, giving the company every incentive to push revenue higher beforehand.

Since the Ukraine Crisis in 2022, Starlink has become indispensable to modern warfare. SpaceX now operates around 10,000 satellites in orbit — more than 60 percent of all active satellites worldwide. That scale dwarfs the satellite constellations of rivals like OneWeb and Amazon.

But the Ukraine Crisis also gave the world its first hard look at the risks of Starlink dependency. During a Ukrainian counteroffensive in 2022, Musk abruptly cut service in certain areas, disrupting the advance. Last summer, a US Navy test was derailed when a global Starlink outage left unmanned vessels without connectivity.

Clayton Swope, a senior fellow at the Center for Strategic and International Studies, is blunt: SpaceX has pushed the US government into a no-win position. Unlike traditional defence contractors, SpaceX commands far greater bargaining power in front of the Pentagon. Beyond rockets and AI, it controls a vast commercial Starlink market — and the Pentagon cannot simply walk away. According to documents filed with the US Securities and Exchange Commission, roughly 20 percent of SpaceX's total revenue comes from the US government.

From the start of the Middle East conflict, Starlink was already woven into the core of US military operations. Sources familiar with the matter say that during the bombing campaign, Starshield terminals were deployed on more than a dozen drone models. Then on February 28, the United States struck Iran — and the relationship between the two sides tightened sharply. The very next day, on March 1, Musk responded on X to a photo of a LUCAS drone. He wrote that the drone appears to have a Starlink terminal integrated（找不到原文）, and added: "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. There is a separate network called Starshield, which is operated by the US government. This is not under SpaceX control."

The Pentagon quickly denied any breach. But according to two informed sources, SpaceX executives met Pentagon officials again within days, once more insisting the military was paying too little. One source said that although the Pentagon initially agreed to pay more for satellite connectivity on attack drones, senior officials — including the Deputy Secretary of Defense — remained uneasy. During the subsequent ceasefire, the two sides reconvened in April to reopen the pricing discussion.

The dispute is far from settled. According to relevant documents, the Department of Defense is still weighing an additional purchase of more than 3,500 Starshield terminal subscriptions, including 100 higher-priced aviation-tier services. That deal could generate hundreds of millions of dollars in annual revenue for SpaceX. Whether it will be finalised — and at what price — remains unknown.

Meanwhile, The Wall Street Journal previously reported that after large-scale protests erupted in Iran in January, the Trump administration secretly moved more than 6,000 Starlink terminals into the country, claiming the aim was to give local people internet access. The plan backfired: the Iranian government confiscated the devices and deployed jamming equipment to cut the connections.

Almost simultaneously, Pentagon officials opened talks with SpaceX on deploying a "direct-to-cell" service capable of bypassing jamming. The technology functions similarly to 5G, enabling users to connect directly without ground terminals. SpaceX — which earned US$11.4 billion from Starlink in 2025 — quoted an eye-watering price: up to US$500 million to launch the service, plus US$100 million a month for operations. The figure gave Defence Department officials a serious headache. Whether the two sides ultimately struck a deal remains unconfirmed.

The reality is that this bust-up between SpaceX and the Pentagon has spread from drones to mobile phones, and from the Middle East all the way to Washington. There is no sign of it ending anytime soon.

Deep Throat

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Trump is hammering his European allies — and the cracks are widening by the day. Some analysts believe this accelerating transatlantic divide is handing China a rare window of strategic breathing room. The catch: Beijing must keep its nerve and resist being drawn passively into Washington's chess game.

According to the South China Morning Post, Trump ordered the withdrawal of 5,000 troops from Germany in recent days. He also threatened to slash the US military presence in Italy and Spain. At the same time, he repeatedly cited allied nations' refusal to support military action against Iran as grounds to pull out of NATO altogether.

This is not a sudden rupture — it has been building since Trump's return to the White House. NATO allies had long been bracing for US troop reductions. The Trump administration has repeatedly warned that Europe can no longer count on American security guarantees and must shoulder more of the burden on both defense spending and support for Ukraine.

America's retreat is pushing traditional allies to scramble for new anchors.

Since the beginning of this year, leaders from the UK, Canada, Finland, Spain, and other countries have visited China in rapid succession. Their aim is twofold: to hedge against the unpredictability of US policy, and to fill the vacuum Washington has left on issues such as climate change.

Ma Bo, Associate Professor at the School of International Studies, Nanjing University, argues that Beijing's best move is patience — let Washington's own actions do the damage. "As long as China avoids direct confrontation with the US in the short term, Washington's damage to its own alliance system may actually relieve pressure on China," Ma said. China's top priority, in his view, is to keep a cool head: avoid being drawn into conflicts it did not start, and prevent the US from redirecting its attention back towards China.

Zhao Minghao, Deputy Director of the Centre for American Studies at Fudan University, goes further. The fractures in the US alliance system are accelerating, he says, and the impact will be "far-reaching and enduring." A number of Western countries — including Germany — are actively working to repair ties with China. That suits Beijing well, as every major player now recognizes the need to reduce exposure to US-driven risk.

The reality is that political warmth between China and Europe does not translate automatically into economic openness. Despite the political tensions between Washington and Brussels, the EU's economic stance towards China remains guarded. European officials continue to accuse China of using industrial policy to prop up its companies and undercutting European markets with low-priced goods.

The EU has now introduced the Industrial Accelerator Act, targeting foreign investment in four emerging strategic sectors: batteries, electric vehicles, solar photovoltaics, and critical raw materials. The Act imposes mandatory technology transfer requirements, caps on foreign equity stakes, and local content requirements. Analysts warn that these "EU-first" provisions could deepen global trade friction.

Chatham House has noted that the "Europe-first" mechanisms embedded in the Act represent a significant revision of the EU's long-standing commitment to free trade. Some European industry groups and officials within the EU itself have also raised concerns that the new rules could raise business costs and disrupt supply chains. The US journal Eurasian Review has noted the stark contrast at play: Western economies remain deeply intertwined with China, which dominates clean energy technology and upholds free trade — a posture that stands in sharp relief against American unilateralism.

China's Ministry of Commerce has been equally direct. It has repeatedly stressed that China and the EU are each other's important trade and economic partners. It has urged the EU to take the lead in upholding WTO rules and return to a path of fair, transparent, and non-discriminatory cooperation as soon as possible.

On 27 April, a Ministry spokesperson confirmed that China had submitted formal comments to the European Commission expressing grave concerns. China remains willing to engage in dialogue. But the Ministry was unequivocal: if the EU disregards China's views and presses ahead with enacting the Act into law — thereby harming the interests of Chinese enterprises — China will have no choice but to take countermeasures to firmly defend the lawful rights and interests of Chinese enterprises.