Pentagon disputes SpaceX’s $500M plan for Starlink service in Iran
SpaceX wants half a billion dollars upfront plus $100M per month to beam internet directly to Iranian phones, and the Defense Department isn't exactly thrilled about the price tag.
Share
Add us on Google by Editorial Team May. 26, 2026SpaceX has pitched the Pentagon on a direct-to-cell Starlink service that would let ordinary mobile phones in Iran bypass government internet blackouts. The price: $500 million upfront, plus $100 million every single month.
The half-billion dollar ask
The direct-to-cell capability SpaceX is proposing would be genuinely novel. Rather than requiring specialized Starlink terminals on the ground, the service would beam connectivity straight to standard mobile phones. In English: any Iranian with a regular smartphone could potentially get online even during a government-imposed internet shutdown.
AdvertisementThe cost dispute doesn’t stop at the direct-to-cell proposal either. SpaceX has also pushed to raise its per-terminal fee for military Starlink hardware from roughly $5,000 to around $25,000. The Pentagon has reportedly accepted some of these higher terminal prices, albeit reluctantly.
Why this matters beyond the budget fight
The $100 million monthly fee alone would put the annual cost of this single service at $1.2 billion. For context, Starlink generated an estimated $11.4 billion in revenue in 2025. Landing a contract of this size from the Defense Department would represent a meaningful chunk of the business, while simultaneously deepening the military’s dependence on SpaceX infrastructure.
The leverage problem
Defense officials find themselves in an uncomfortable position. The US military has spent years integrating Starlink into its operational toolkit, and there is no comparable alternative that could be spun up quickly.
Amazon’s Project Kuiper, the closest potential competitor in the satellite broadband space, is still in its early deployment phases and lacks the direct-to-cell capability SpaceX has developed. Traditional defense contractors like Lockheed Martin and Northrop Grumman operate satellite systems, but nothing with Starlink’s scale or the specific phone-connectivity feature being proposed.
Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.
