An approach is provided for bandwidth allocation on a per terminal utilization and per inroute/inroute group basis, which optimizes bandwidth utilization. An aggregate average bandwidth usage of a plurality of remote terminals over a wireless communications channel is determined. A maximum rate for bandwidth allocations to each of the remote terminals for respective data transmissions over the channel is determined. A utilization metric reflecting a bandwidth utilization by one of the remote terminals for data transmissions over the channel is determined. An updated rate for bandwidth allocations to the one terminal is determined based on the utilization metric for the terminal, a target bandwidth utilization and tolerance range for the one terminal, and the maximum rate for the data allocations to each of the remote terminals. The updated rate for the bandwidth allocations to the one terminal is applied to subsequent bandwidth allocations for the one terminal.