Pentagon clashes with SpaceX over $500 million Starlink plan for Iran

The Pentagon has found itself at odds with Elon Musk’s SpaceX over the steep price tag of a proposal to help Iranians bypass government-imposed internet blackouts using Starlink’s direct-to-cell technology, according to a report by Reuters citing two sources.

SpaceX has proposed charging up to $500 million to launch the direct-to-cell Starlink service for users in Iran, plus an additional $100 million per month to operate it, the news agency reported, citing documents and a person familiar with the matter. The service would function similarly to 5G, allowing smartphones to connect directly to satellites without requiring traditional ground infrastructure.

The high cost has alarmed Pentagon officials, who are actively seeking ways to circumvent Tehran’s periodic shutdowns of internet access during civil unrest. Iran has frequently restricted online communication, citing national security concerns, while critics say the blackouts are meant to suppress dissent.

While SpaceX has previously provided Starlink terminals to Ukraine following Russia’s invasion, the new direct-to-cell capability represents a more advanced and potentially more expensive technological leap. The reported friction highlights growing tensions between the Pentagon’s operational goals and the business terms set by private space firms.

Neither the Pentagon nor SpaceX has publicly commented on the reported pricing dispute.