EXHIBIT 10.1

TELEPHONE AND DATA SYSTEMS, INC. (THE “COMPANY”)

COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS (THE “PLAN”)

EFFECTIVE MAY 5, 2005

        The purpose of the Plan is to provide reasonable compensation to
non-employee directors for their service to the Company, in order to ensure that
qualified persons serve as non-employee members of the Board of Directors.

        The Plan was approved pursuant to the authority granted in Section 2.22
of Article II of the Company’s By- Laws, which provides that the Board of
Directors shall have authority to establish reasonable compensation of
directors, including reimbursement of expenses incurred in attending meetings of
the Board of Directors.

        The Plan provides that each director of the Company who is not an
employee of the Company, TDS Telecommunications Corporation, United States
Cellular Corporation or any other subsidiary of the Company (“non-employee
director”) will receive an annual director’s retainer fee of $44,000, paid
quarterly, a directors meeting fee of $1,750 for each meeting attended and
reimbursement of reasonable expenses incurred in connection with attendance at
meetings of the Board of Directors. The Chairperson of the Board of Directors
will receive an additional annual retainer fee of $34,000.

        The Plan provides that each non-employee director who serves on the
Audit Committee, other than the Audit Committee Chairperson, will receive an
annual committee retainer fee of $11,000, paid quarterly, a committee meeting
fee of $1,750 for each meeting attended and reimbursement of reasonable expenses
incurred in connection with attendance at meetings of the Audit Committee. The
Audit Committee Chairperson will receive an annual retainer fee of $22,000, paid
quarterly, an Audit Committee meeting fee of $1,750 for each meeting attended
and reimbursement of reasonable expenses incurred in connection with attendance
at such meeting.

        The Plan provides that each non-employee director of the Company who
serves on the Long-Term Compensation Committee, other than the Long-Term
Compensation Committee Chairperson, will receive an annual committee retainer
fee of $5,000, paid quarterly, a committee meeting fee of $1,750 for each
meeting attended and reimbursement of reasonable expenses incurred in connection
with attendance at each meeting of the committee. The Long-Term Compensation
Committee Chairperson will receive an annual retainer fee of $7,000, paid
quarterly, plus Long-Term Compensation Committee meeting fees of $1,750 for each
meeting attended and reimbursement of reasonable expenses incurred in connection
with attendance at such meeting.

        The Plan provides that each non-employee director of the Company who
serves on the Corporate Governance Committee will receives a committee meeting
fee of $1,750 for each meeting attended and reimbursement of reasonable expenses
incurred in connection with attendance at each meeting of the committee.

        Under the Plan, retainers are paid on a quarterly basis, as of the last
day of each quarter. Meeting fees are paid as of the date of the meeting.
Non-employee directors will receive fifty percent (50%) of their board and
committee retainers and fifty percent (50%) of meeting fees for regularly
scheduled meetings of the board (five per year) in the form of common stock of
the Company. Each non-employee director may elect to receive an additional
percentage of such retainers and meeting fees in the form of common stock of the
Company, up to 100%. This election shall be made annually and shall be
irrevocable

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for that one-year period. For retainers and regularly scheduled meetings of the
board during 2005, such common stock shall continue to consist of Common Shares,
par value $0.01 per share, of the Company previously authorized; for retainers
and regularly scheduled meetings of the board in 2006 and subsequent years, such
common stock shall consist of Special Common Shares, par value $0.01 per share,
of the Company.

        The number of shares to be delivered shall be determined on the basis of
the average closing price of Common Shares or Special Common Shares, as
applicable, of the Company as reported in the American Stock Exchange Composite
Transactions section of the Wall Street Journal for the twenty trading days
before the end of the quarter or the date of the board meeting.

        Fees for special meetings of the board and all committee meetings will
be paid in cash.

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