The Federal Communications Commission will pay a group of satellite companies billions of dollars to upend their operations so a valuable swath of the radio spectrum can be used for cellphone service, FCC Chairman Ajit Pai said.

The telecom regulator said he plans to propose $3 billion to $5 billion of compensation for reasonable relocation costs and another $9.7 billion of accelerated payments to incumbent operators in the C-Band section of the electromagnetic spectrum. Private companies that bid for the frequency licenses in a future auction would foot the bill, Mr. Pai said.

Existing satellite companies, which include Intelsat SA and SES SA, serve television broadcasters and cable-network operators in the U.S. with video feeds that could be interrupted by cellphone service unless the companies modify their satellite systems.

“We need to align the satellite companies’ private interests with the public interest,” Mr. Pai said Thursday in a speech hosted by the Information Technology and Innovation Foundation, a Washington telecom policy group.

A spokesman for the C-Band Alliance, a trade group representing the major satellite companies, said the consortium was pleased with Mr. Pai’s statement.