A method and apparatus at a local terminal are described for demodulating a remote-terminal signal located at a subband offset frequency in a frequency subband of relayed interference from a transponder satellite link. The demodulation of the remote-terminal signal is accomplished by transferring the digital data that produced the local-terminal transmit signal to the local-terminal receiver. The digital data is time-delayed and converted to a narrowband offset-constellation signal that cancels the relayed interference in an adaptive equalizer. Providing cancellation in the subband of the relayed interference produces larger interference cancellation factors than those obtained in conventional broadband cancellation systems. A phase-noise error signal is also generated and used to increase cancellation levels limited by phase noise generated in the satellite link frequency converters. Additionally the receiver converter frequencies are chosen such that errors in estimating the subband offset frequency do not affect cancellation in the adaptive equalizer.