Congestion in the Internet results in wasted bandwidth and also stands in the way of guaranteeing QoS. The effect of congestion is multiplied many fold in Satellite networks, where the resources are very expensive. Thus congestion control has a special significance in the performance of Satellite networks. In today's Internet, congestion control is implemented mostly using some form of the de facto standard, RED. But tuning of parameters in RED has been a major problem throughout. Achieving high throughput with corresponding low delays is the main goal in parameter setting. It is also desired to keep the oscillations in the queue low to reduce jitter, so that the QoS guarantees can be improved. In this paper, we use a previously linearized fluid flow model of TCP-RED to study the performance and stability of the Queue in the router. We use classical control tools like Tracking Error minimization and Delay Margin to study the performance, stability of the system. We use the above-mentioned tools to provide guidelines for setting the parameters in RED, such that the throughput, delay and jitter of the system are optimized. Thus we provide guidelines for optimizing satellite IP networks. We apply our results exclusively for optimizing the performance of satellite networks, where the effects of congestion are much pronounced and need for optimization is much important. We use ns simulator to validate our results to support our analysis.