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EXCLUSIVE: Musk’s SpaceX says it can no longer pay for critical satellite services in Ukraine, asks Pentagon to pick up tab


Washington
CNN

Starlink satellite internet terminals, built by Elon Musk’s SpaceX, have been an important source of communications for the Ukrainian military since they first began arriving in Ukraine last spring, and even if their cellphone and internet networks were destroyed, the Ukrainian military would continue to operate. can fight and stay connected. War with Russia.

To date, approximately 20,000 Starlink satellite units have been donated to Ukraine. tweet on friday “It will cost SpaceX $80 million to operate and will exceed $100 million by the end of the year.”

But those charitable donations are coming to an end as SpaceX warned the Pentagon that it could stop funding its services in Ukraine unless the U.S. military puts in tens of millions of dollars a month. There is a possibility.

According to documents obtained by CNN, Musk’s SpaceX sent a letter to the Pentagon last month saying it could no longer continue funding Starlink services to date. The letter also calls for the Pentagon to take over funding for Starlink’s Ukrainian government and military use, which will cost SpaceX more than $120 million over the rest of the year. It claims it could cost nearly $400 million over the next 12 months.

“We are not in a position to donate more terminals to Ukraine or fund existing terminals indefinitely,” SpaceX’s director of government sales told the Pentagon in a September letter. said in a letter.

Among SpaceX documents sent to the Pentagon and reviewed by CNN, it was previously reported that Ukrainian military commander General Valerii Zaluzhniy directly requested Musk to add nearly 8,000 Starlink terminals in July. There are things that weren’t.

In a separate cover letter to the Pentagon, a SpaceX external consultant wrote: I doubt they have the financial capacity to provide additional terminals and services at the request of General Zalzhini. ”

A previously unreported document provides a rare breakdown of SpaceX’s own internal numbers on Starlink, detailing costs and payments associated with thousands of terminals in Ukraine. They also shed new light on behind-the-scenes negotiations that have provided Ukraine with millions of dollars in telecommunications hardware and services at little cost to Kyiv.

Musk on Friday asked the Pentagon to collect Starlink bills in Ukraine after Ukrainian diplomats responded to Musk’s Ukraine peace plan earlier this month before the letter was sent to the Pentagon. said he was following the advice of “F*** off.”

Ukraine’s ambassador to Germany, Andriy Melnik, responded earlier this month to Musk’s alleged peace plan for Russia’s war in Ukraine, saying “F*** off is a very diplomatic response to @elonmusk.” rice field.

In response to a tweet referencing CNN’s report and Melnyk’s comments, Musk said on Friday, “We are his I’m just following the recommendations,” he said.

The letter comes amid recent reports of widespread Starlink outages as Ukrainian forces attempt to retake lands occupied by Russia in the east and south of the country.

A source familiar with the outage said the entire front line was suddenly affected on September 30. Discuss sensitive conversations. “Starlink is the primary means by which units on the battlefield communicate.”

Another official said there was no warning to the Ukrainian military, adding that now that Ukraine has liberated the region, it should be required to turn on Starlink services.

The Financial Times was the first to report the outage that resulted in a “catastrophic” communication breakdown, a senior Ukrainian official said. In a tweet in response to his article, Musk said he did not dispute the outage and said what was happening on the battlefield was classified.

SpaceX’s proposal to stop funding Starlink comes amid growing concerns in Ukraine over Musk’s allegiance. Musk recently tweeted a controversial peace plan for Ukraine to abandon Crimea and take control of eastern Luhansk and Donetsk regions.

After Ukrainian President Volodymyr Zelensky asked who Mr. Musk was on, he replied, “I still have a lot of support.”[s] Ukraine” but fears “massive escalation”.

Musk privately claimed last month that Ukraine does not want peace talks at the moment and that “Russia will accept those terms” if they go along with his plan.

“Ukraine knows that its current government and wartime efforts are completely dependent on Starlink,” said a person familiar with the discussion. “The decision to continue to operate Starlink is completely in the hands of one man, and that is Elon Musk. I didn’t decide for it, it’s the technology and the company he built that got him there.”

On Tuesday, Musk denied reports that he had spoken directly to Putin about Ukraine. On Thursday, when the Ukrainian minister tweeted that Starlink is essential to Ukraine’s infrastructure, mask replied: “You are the most welcoming. Happy to help Ukraine.”

More than seven months into the war, it’s hard to overstate the impact Starlink has had on Ukraine. The government of Kyiv, the Ukrainian military, NGOs and civilians rely on agile, compact and easy-to-use units created by SpaceX. Besides being used for voice and electronic communications, it is also used to fly drones and transmit video to correct artillery fire.

CNN has seen it used on numerous Ukrainian bases.

Elon Musk pauses and looks down as he speaks during a press conference at SpaceX's Starbase facility near Boca Chica Village in South Texas on February 10, 2022.

“Starlink was absolutely essential as Russia has been targeting Ukraine’s telecommunications infrastructure,” said Dimitri Alperovic, co-founder of the think tank Silverado Policy Accelerator. would often operate blindly.”

Musk was widely praised and thanked for responding to a request for Starlink services to Ukraine soon after the war began, but in reality most of the 20,000 terminals were owned by the U.S. government, SpaceX. Britain and Poland, according to a letter to the Pentagon.

SpaceX’s request that the U.S. military introduce legislation ranked Pentagon officials. A senior defense official told his CNN that SpaceX had the “courage to look like a hero,” but forced others to pay heavily, now presenting bills of tens of dollars. I’m here. millions every month.

According to SpaceX figures shared with the Pentagon, about 85% of Ukraine’s 20,000 terminals are paid for (or partially paid for) by countries such as the United States and Poland, as well as other entities. These entities also pay for about 30% of Internet connectivity, which SpaceX says costs $4,500 per unit per month for the most advanced service. (Musk tweeted over the weekend that Ukraine has about 25,000 devices.)

In a July letter to Musk, Ukraine’s top commander, General Zaluzhniy, praised the “extraordinary availability” of Starlink units, saying about 4,000 terminals were deployed by the military. However, about 500 terminals are destroyed in combat every month, Zaluzniy said, demanding another 6,200 terminals for Ukrainian military and intelligence agencies, and 500 per month to offset the losses. did.

SpaceX said it responded by asking Zarzhini to take up his request to the Pentagon instead.

On Sept. 8, SpaceX’s senior director of government sales wrote to the Pentagon that the cost was too high, approaching $100 million. Officials have asked the Pentagon to recover Ukraine’s new claims and ongoing service costs totaling $124 million for the remainder of 2022.

For the full year, these costs will amount to about $380 million, according to senior defense officials.

SpaceX has declined repeated requests for comment on both the suspension and recent requests to the Pentagon. A lawyer for Musk did not respond to a request for comment. Pentagon spokesman Bob Ditchie told CNN: I have nothing else to add at this time. ”

Initial U.S. support for Starlink was provided through the U.S. Agency for International Development (USAID), which spent about $3 million on Ukrainian hardware and services, according to The Washington Post. According to newly obtained documents, the largest terminal contributor is Poland, with payments made for around 9,000 individual terminals.

US Department of Defense building in Washington DC overlooking aerial view from above

The United States offers nearly 1,700 terminals. Other contributors include the UK, NGOs and crowdfunding.

The much more expensive part, however, is the continuous connection. SpaceX says it paid about 70% of the services provided to Ukraine, claiming it offered a top-level monthly fee of $4,500 for all Ukrainian terminals.

The handset itself costs $1,500 and $2,500 for two models sent to Ukraine, according to the documents, but the consumer model on Starlink’s website is much cheaper, with service in Ukraine costing just $60 a month. be.

That’s just 1.3% of the service fee, which SpaceX says the Department of Defense will have to start paying.

“You could say he’s trying to get money from the government or just say ‘I don’t want to be involved in this anymore,'” said a person familiar with Ukraine’s demands for Starlink. Given the recent outage and Musk’s reputation for being unpredictable, “sentiment on the Ukrainian side is very high,” the person said.

Musk is the privately held largest shareholder of SpaceX. In May, SpaceX revealed its valuation had risen to $127 billion and raised $2 billion this year, CNBC reported.

Musk faced a barrage of criticism on Twitter, including from Ukrainian President Volodymyr Zelensky, after he announced a peace plan to end the war in a series of tweets last week. It would include ceding Crimea to Russia and re-running referendums, now supervised by the United Nations, in four territories Russia has recently illegally annexed.

It echoes comments he made last month at a closed-door conference called “The Weekend” in Aspen, Colorado, where Musk was in a room full of attendees, saying Ukraine had recently scored a victory. He said that now that the situation has been settled, we should seek peace now.

“Now is the time to do it. They don’t want to do it, that’s for sure. But now is the time to do it,” he said, according to someone in the room. I want peace, but I don’t want peace when I’m winning. For now.”

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