Iran now has more than 30,000 SpaceX Starlink satellite internet subscribers amid ongoing internet restrictions, though officials warn the service is undermining the country's telecommunications economy.

The surge in satellite internet adoption comes as Iranian authorities struggle to restore internet quality to levels seen before September 2022 following the death of Mahsa Amini, when widespread restrictions were implemented. The restrictions have led to an proliferation of VPN services and alternative access methods that officials warn are creating new security risks. The government has also been in negotiations with Musk, following a New York Times photographer catching the world’s richest man leaving a meeting with Iran’s United Nations diplomats.

"While this makes internet access easier for Iranians, it's the most expensive method and is destroying our communications economy, draining hundreds of millions of dollars from the country," said Pouya Pirhoseinlou, head of the E-Commerce Association's Internet Committee, Fararu reported.

Speaking at a Tehran Chamber of Commerce meeting, Pirhoseinlou noted Iran's internet situation has improved in recent months but hasn't returned to pre-September 2022 levels. "We hope to return to those conditions by mid-winter," he said.

"Widespread restrictions have also led to network pollution, with free VPNs turning our mobile phones into zombies and causing disruptions to both domestic and foreign internet networks," he added.

He criticised the judicial process around internet restrictions, asking: "How can a single judge who has been convicted in Iran's judicial system block Telegram overnight, while the positive opinion of the heads of three branches and the president's emphasis cannot lead to unblocking Telegram?"

Hamidreza Ahmadi, a member of the E-Commerce Association, warned that foreign VPN providers, including Israeli companies, are creating security risks. "Free VPNs are contaminating our IP addresses, causing many websites to require human verification upon entry," he said.

The situation has been compounded by international sanctions, with Iranians blocked from accessing 17% of the top 100,000 websites globally.

Many sites block Iranian users even when not legally required, citing risk management concerns despite Iran's potential market value. However, Telegram Messenger now has several groups and salespeople who deliver the systems around the country.

Iranians remain reliant on foreign relatives, however, as the monthly payment for the system requires a foreign credit card, which is not available from Iranian banks due to sanctions on the country.

Starlink services came to prominence in the region following Elon Musk’s offer of free satellite internet systems to the country following the US announcement of a removal of sanctions on the export of the technology to the country.

The Treasury said in a statement that it intended to increase support for internet freedom in Iran by updating a general licence allowing access to certain services, software and hardware.

SpaceX CEO Elon Musk responded to the US announcement by saying that he would activate the firm's satellite internet service, Starlink, to cover Iran.