Elon Musk picks fight with US government over Starlink service to Ukraine

Its not clear what it really costs to provide Ukraine with internet service during war, and who will pay for it

(Getty Images)

SpaceX CEO Elon Musk keeps changing the price of Starlink satellite internet services in Ukraine in his communications, and in doing so may be picking a fight with the US Department of Defence.

Mr Musk began shipping Starlink terminals to Ukraine in February, and providing free Internet connectivity, connectivity that proved essential to the success of Ukrainian troops in the face of the invading Russian military. SpaceX donated some of the terminals, while others have been paid for by the US government and other actors.

But Mr Musk has recently begun saying SpaceX can no longer absorb the cost of providing the service to Ukraine, and the exact cost to SpaceX keeps changing.

In a 7 October post to the social media site Twitter responding to reporting by the Financial Times, Mr Musk pinned the cost to SpaceX of providing Ukraine with internet coverage through the end of the year, using about 25,000 Starlink terminals, at $20m.

But on Friday, Mr Musk tweeted that it was costing SpaceX $20m a month.

That didn’t add up to satellite industry consultant Tim Farrar, who tweeted as much Friday morning. Mr Farrar suggested that by inflating the cost, Mr Musk is not just including the donated cost of Starling service for each terminal, $250, but also the costs of Starlink’s expansion to cover clients in the United States.

“Elon’s clearly just making things up at the moment,” Farrer wrote in the tweet.

Reporting by CNN, meanwhile, showed that SpaceX has asked the US Department of Defence to pay for Starlink services to Ukraine for the remainder of the year, at an even higher price of $124m for the quarter.

The free-floating price quotes come in the midst of Mr Musk publicly threatening to revoke free Starlink services from Ukraine after taking insult to comments made by Ukrainian ambassador to Germany Andrij Melnyk, in response to Mr Musk's own tweets urging Ukraine and the west to reach a peace settlement with Russia.

“There's always a lot of to and fro between defense contractors and the government over contracts, and how much they are going to be able to charge. It normally doesn't happen on Twitter,” Mr Farrar told The Independent in an interview. “That's ultimately the problem here: this is all happening on Twitter, and is entangled with all the other things that are going on with Elon Musk at the moment in terms of his commentary on geopolitical issues.”

SpaceX is accustomed to playing loosely with pricing for its Starlink internet service generally, Mr Farrar noted, offering initial Starlink service in North America at $99 per month “Because that sounds like a nice number to charge people,” he said, and similarly slashing the initial price of a Starlink terminal from $1,000 to $500, “because they thought they would sell more.” That’s not unusual an unusual practice in pricing a commerical internet service, he added.

It’s a bit different when trying to justify costs to the Department of Defence, Mr Farrer said, and if Mr Musk and SpaceX are factoring in the costs of expanding Starlink service outside of Ukraine, or even the costs of developing Starship for Mr Musk’s goal of building a Martian city, it may not go over well with the US government.

“‘But we want the money to go to Mars,’” Mr Farrar said. “‘Well, that’s not what the DOD is paying you for, really, is it?”

The question in Mr Farrar’s mind is just why Mr Musk seems to be picking a fight with one of SpaceX’s biggest customers, since his rockets fly an awful lot of high cost payload for the Department of Defence.

“It’s surprising he'd pick the DOD for a fight because, realistically, they have been, you know, one of SpaceX's biggest backers over the last five-plus years,” Mr Farrar said. At the same time, he points out, SpaceX in the midst of combative exchanges with the Federal Communications Commission over the FCC’s rejection of the SpaceX bid for services for the FCC’s Rural Digital Opportunity Fund, or RDOS a program to bring broadband internet to the real US, and for licensing of the next generation of Starlink satellite.

“He may end up involved in a standoff with some of the regulators in the car business over self-driving cars, and he may be involved in standoffs with the Securities and Exchange Commission over his activities in buying Twitter. There's all these different areas,” Mr Farrar said. “What's the end game if he gets into a confrontation with the US government, across multiple fronts?”