This paper proposes a new channel allocation algorithm for satellite communication systems. The algorithm is based on a spectrum division transmission technique as well as a spectrum compression transmission technique that we have developed in separate pieces of work. Using these techniques, the algorithm optimizes the spectrum bandwidth and a MODCOD (modulation and FEC error coding rate) scheme to balance the usable amount of satellite transponder bandwidth and satellite transmission power. Moreover, it determines the center frequency and bandwidth of each divided subspectra depending on the unused bandwidth of the satellite transponder bandwidth. As a result, the proposed algorithm enables flexible and effective usage of satellite resources (bandwidth and power) in channel allocations and thus enhances satellite communication (SATCOM) system capacity.