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SpaceX reportedly fed up with providing free Starlink to Ukraine

How can Elon mess up geopolitics today?

The Starlink-Ukraine honeymoon period appears to be at an end: SpaceX reportedly wants the US to begin picking up the tab for more of its war-zone services, while CEO Musk's tweets have only served to upset the situation.

Claims that Musk's satellite company were unhappy with the costs of sending Starlink base stations and providing service to Ukraine come via CNN, which reported yesterday that it had obtained a copy of a letter sent by SpaceX to the Pentagon asking the military to start paying its fair share. 

It's worth noting that there are number of folks paying for Starlink service in Ukraine, either Ukrainians themselves or donors.

"We are not in a position to further donate terminals to Ukraine, or fund the existing terminals for an indefinite period of time," that letter apparently stated. Per CNN, which did not share a full copy of the correspondence, SpaceX claimed its Ukrainian operations would cost more than $120 million for the rest of the year, and nearly $400 million for the next 12 months. 

In effect, Musk is saying: here's some free gear and satellite internet services for those suffering in Ukraine, though now that everyone thinks I'm a hero, I might just cancel it and have others pay for it all. At least one US official is exasperated by the threat.

SpaceX's letter to the Dept of Defense was reportedly sent in September, which means that Musk's recent tussles with Ukrainian officials on Twitter, and his suggestion that Ukraine gives in to Russia and ends the war, have all come since. That makes what Kyiv Post correspondent Jason Jay Smart tweeted a bit chronologically off, perhaps, but still relevant to Musk-Kyiv relations. 

Smart said this morning that the SpaceX letter came days after outgoing Ukrainian ambassador to Germany Andrij Melynk told Musk to "f*** off" (in response to Musk's ill-judged Ukraine capitulation plan) on Twitter.

The September letters to the Pentagon, in which SpaceX threatens to pull the plug on his free service, seemingly predate Melynk's October 3 outburst. Still, Musk's response to Smart today is unlikely to help things: "We're just following [Melynk's] recommendation," Musk said. 

Musk also responded several times on other threads around the CNN story earlier today, saying, among other things: "Also, Starlink is still losing money! It is insanely difficult for a LEO communications constellation to avoid bankruptcy – that was the fate of every company that tried this before."

Backing up a step

Musk claimed on October 4 that Starlink had lost more than $80 million (£71m) since entering Ukraine, but those numbers are hard to verify. Musk has also claimed Starlink is "far from cash flow positive."

Of late there has been a significant rise in the price of Starlink equipment and service, which could possibly indicate potential problems with its pricing model and earnings projections

Meanwhile, according to The Washington Post, SpaceX isn't keeping close track of how the Ukraine terminals have been funded.

It noted March comments earlier this year from SpaceX president Gwynne Shotwell that she "[didn't] think the US has given us any money to give terminals to the Ukraine." 

The WaPo report went on to report that the United States Agency for International Development (USAID) had purchased at least 1,500 terminals from SpaceX, and at a markup.

The paper claimed to have seen documents from USAID showing the agency paid $1,500 per Starlink terminal, while the standard price for consumers is $600 for the kit, and $110 per month for service. 

SpaceX has also donated several thousand terminals with three months of unlimited data, WaPo said. All in all, the US government has paid approximately $3 million to SpaceX for equipment shipped to Ukraine. 

Souring relations

According to the documents CNN saw, Ukrainian General Valerii Zaluzhnyi asked for an additional 8,000 Starlink terminals in July, which a SpaceX consultant reportedly said wouldn't be financially possible. 

It's unknown how Ukraine took that response, but in the months since Musk has seemingly adopted a petulant attitude toward the country, tweeting suggestions about a peace plan for Ukraine that included plenty of Russian appeasement. 

According to the Financial Times, Starlink service in Ukraine has been sporadic and suffered from days-long outages in front-line territory as Ukrainian troops push east and retake land seized by Russia. 

While service was restored in several areas not long after initial reporting, the Financial Times said that Ukrainian officials have ruled out technical malfunctions or Russian jamming efforts. 

There hasn't been any formal fingerpointing over the outages, and Musk has said that what's happening on the battlefield is classified – so don't expect an official explanation. We might get an inflammatory tweet, though. ®

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