<PAGE>   1
                                                                  EXHIBIT 10.29


                        SEVERANCE COMPENSATION AGREEMENT


     SEVERANCE COMPENSATION AGREEMENT dated as of __________, between DSC
COMMUNICATIONS CORPORATION, a Delaware corporation (the "Company) and
_______________ (the "Executive").

     WHEREAS, the Compensation Committee of the Board of Directors of the
Company has determined that it is appropriate to reinforce and encourage the
continued attention and dedication of members of the Company's management,
including the Executive, to their assigned duties without distraction in
potentially disturbing circumstances arising from the possibility of a change
in control of the Company; and

     WHEREAS, the Company's Board of Directors has determined that it is in the
best interest of the Company and its stockholders to enter into this Severance
Compensation Agreement (the "Agreement");

     NOW THEREFORE, this Agreement sets forth the severance compensation which
the Company agrees it will pay the Executive if the Executive's employment with
the Company terminates under certain circumstances described herein following a
Change of Control of the Company (as defined herein).

1.   TERM.

     This Agreement shall terminate, except to the extent that any obligation
of the Company hereunder remains unpaid as of such time, upon the earliest to
occur of (i) the termination of Executive's employment for any reason prior to
a Change in Control; (ii) two years after the date of a Change in Control of
the Company if the Executive has not terminated his employment for Good Reason
(as defined herein) as of such time; and (iii) _______________.

2.   CHANGE IN CONTROL.

     For the purpose of this Agreement, a "Change of Control" shall mean:

          (i)  the acquisition by any individual, entity or group (within the
     meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
     1934 (the "Exchange Act") (a "Person"), of beneficial ownership (within
     the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or
     more of either (a) the then outstanding shares of common stock of the
     Company (the "Outstanding Company Common Stock") or (b) the combined
     voting power of the then outstanding voting securities of the Company
     entitled to vote generally in the election of directors (the "Outstanding
     Company Voting Securities"); provided, however, that the


<PAGE>   2

      following acquisitions shall not constitute a Change in Control: (a) any
      acquisition directly from the Company (excluding an acquisition by virtue
      of the exercise of a conversion provision), (b) any acquisition by the
      Company (excluding any acquisition by any successor of the Company), (c)
      any acquisition by an employee benefit plan (or related trust) sponsored
      by or maintained by the Company or any corporation controlled by the
      Company, or (d) any acquisition by any corporation pursuant to a
      reorganization, merger or consolidation, if, following such
      reorganization, merger or consolidation, the condition described in
      clauses (a), (b), and (c) of subsection (iii) of this Section 2 are
      satisfied; or

           (ii)  individuals who, as of the date hereof, constitute the Board
      of Directors of the Company (the "Incumbent Board") cease for any reason
      to constitute at least a majority of the Board of Directors; provided,
      however, that any individual becoming a director subsequent to the date
      hereof whose election, or nomination for election by the Company's
      stockholders, was approved by a vote of at least two-thirds (2/3) of the
      directors then constituting the Incumbent Board shall be considered as
      though such individual were a member of the Incumbent Board, but
      excluding, for this purpose, any such individual whose initial assumption
      of office occurs as a result of either an actual or threatened election
      contest subject to Rule 14a-11 of Regulation 14A promulgated under the
      Exchange Act or other actual or threatened solicitation of proxies or
      consents by or on behalf of a Person other than the Board of Directors;
      or

           (iii)  approval by the stockholders of the Company of a
      reorganization, merger or consolidation, in each case, unless, following
      such reorganization, merger or consolidation, (a) more than sixty percent
      (60%) of, respectively, the then outstanding shares of common stock of
      the corporation resulting from such reorganization, merger or
      consolidation and the combined voting power of the then outstanding
      voting securities of such corporation entitled to vote generally in the
      election of directors is then beneficially owned, directly or indirectly,
      by all or substantially all of the individuals and entities who were the
      beneficial owners, respectively, of the Outstanding Company Common Stock
      and Outstanding Company Voting Securities immediately prior to such
      reorganization, merger, or consolidation in substantially the same
      proportions as their ownership, immediately prior to such reorganization,
      merger, or consolidation of the Outstanding Company Common Stock and
      Outstanding Company Voting Securities, as the case may be (for purposes
      of determining whether such percentage test is satisfied, there shall be
      excluded from the number of shares and voting securities of the resulting
      corporation owned by the Company's stockholders, but not from the total
      number of outstanding shares and voting securities of the resulting
      corporation, any shares or voting securities received by any such
      stockholder in respect of any consideration other than shares or voting

                                      -2-


<PAGE>   3

      securities of the Company), (b) no Person (excluding the Company, any
      employee benefit plan (or related trust) of the Company, any qualified
      employee benefit plan of such corporation resulting from such
      reorganization, merger or consolidation and any Person beneficially
      owning, immediately prior to such reorganization, merger or
      consolidation, directly or indirectly, twenty percent (20%) or more of
      the Outstanding Company Common Stock or Outstanding Company Voting
      Securities, as the case may be) beneficially owns, directly or
      indirectly, twenty percent (20%) or more of, respectively, the then
      outstanding shares of common stock of the corporation resulting from such
      reorganization, merger or consolidation or the combined voting power of
      the then outstanding voting securities of such corporation entitled to
      vote generally in the election of directors and (c) at least a majority
      of the members of the board of directors of the corporation resulting
      from such reorganization, merger or consolidation were members of the
      Incumbent Board at the time of the execution of the initial agreement
      providing for such reorganization merger or consolidation; or

           (iv)  (a) approval by the stockholders of the Company of a complete
      liquidation or dissolution of the Company or (b) the first to occur of
      (1) the sale or other disposition (in one transaction or a series of
      related transactions) of all or substantially all of the assets of the
      Company, or (2) the approval by the stockholders of the Company of any
      such sale or disposition, other than, in each case, any such sale or
      disposition to a corporation, with respect to which immediately
      thereafter, (A) more than sixty percent (60%) of, respectively, the then
      outstanding shares of common stock of such corporation and the combined
      voting power of the then outstanding voting securities of such
      corporation entitled to vote generally in the election of directors is
      then beneficially owned, directly or indirectly, by all or substantially
      all of the individuals and entities who were the beneficial owners,
      respectively, of the Outstanding Company Common Stock and Outstanding
      Company Voting Securities immediately prior to such sale or other
      disposition in substantially the same proportion as their ownership,
      immediately prior to such sale or other disposition, of the Outstanding
      Company Common Stock and Outstanding Company Voting Securities, as the
      case may be (for purposes of determining whether such percentage test is
      satisfied, there shall be excluded from the number of shares and voting
      securities of the transferee corporation owned by the Company's
      stockholders, but not from the total number of outstanding shares and
      voting securities of the transferee corporation, any shares or voting
      securities received by any such stockholder in respect of any
      consideration other than shares or voting securities of the Company), (B)
      no Person (excluding the Company and any employee benefit plan (or
      related trust) of the Company, any qualified employee benefit plan of
      such transferee corporation and any Person beneficially owning,
      immediately prior to such sale or other disposition, directly or
      indirectly, twenty percent

                                      -3-


<PAGE>   4

      (20%) or more of the Outstanding Company Common Stock or Outstanding
      Company Voting Securities, as the case may be) beneficially owns,
      directly or indirectly, twenty percent (20%) or more of, respectively,
      the then outstanding shares of common stock of such transferee
      corporation and the combined voting power of the then outstanding voting
      securities of such transferee corporation entitled to vote generally in
      the election of directors and (C) at least a majority of the members of
      the board of directors of such transferee corporation were members of the
      Incumbent Board at the time of the execution of the initial agreement or
      action of the board providing for such sale or other disposition of
      assets of the Company.

3.   TERMINATION FOLLOWING A CHANGE IN CONTROL.

     (a)  At any time following a Change in Control of the Company, the
Executive shall be entitled to the compensation provided in Section 5 upon the
occurrence of either of the following:

           (i)  the termination by the Company of the Executive's employment
      with the Company unless such termination is as a result of (w) the
      Executive's Retirement (as defined in Section 3(c) below); (x) the
      Executive's death; (y) the Executive's Disability (as defined in Section
      3(b) below); or (z) the Executive's termination by the Company for Cause
      (as defined in Section 3(d) below); or

           (ii)  the termination by the Executive of the Executive's employment
      with the Company for Good Reason (as defined in Section 3(e) below).

     (b)  Disability.  The term "Disability" as used in this Agreement shall
mean the Executive's absence from his duties with the Company for a period of
six months, as a result of the Executive's incapacity due to physical or mental
illness.

     (c)  Retirement.  The term "Retirement" as used in this Agreement shall
mean termination by the Company or the Executive of the Executive's employment
based on the Executive's having reached age 65 or such other age as shall have
been fixed in any arrangement established pursuant to this Agreement with the
Executive's consent with respect to the Executive.

     (d)  Cause  For purposes of this Agreement, the Company's termination of
the Executive's employment with the Company shall be considered for "Cause" if
it results from and of the following:

           (i)  the continuing and material failure by the Executive to fulfill
      his employment obligations or willful misconduct or gross neglect in the
      performance of such duties,

                                      -4-


<PAGE>   5



           (ii)  the Executive's committing fraud, embezzlement or
      misappropriation in the performance of his duties as an employee of the
      Company, or

           (iii)  The Executive's committing any felony for which he is
      convicted and which, as determined in good faith by the Board of
      Directors of the Company, constitutes a crime involving moral turpitude
      and may result in material harm to the Company.

     (e)  Good Reason.  The Executive may terminate the Executive's employment
for Good Reason at any time following a Change in Control.  For purposes of
this Agreement, "Good Reason" shall mean any of the following (without the
Executive's express written consent):

           (i)  the assignment to the Executive by the Company of duties
      inconsistent with the Executive's position, duties, responsibilities or
      status with the Company immediately prior to a Change in Control of the
      Company, or a change in the Executive's titles or offices as in effect
      immediately prior to a Change in Control of the Company, or any removal
      of the Executive from or any failure to re-elect the Executive to any of
      such positions, except in connection with the termination of his
      employment for Disability, Retirement or Cause or as a result of the
      Executive's death or by the Executive other than for Good Reason;

           (ii)  a reduction by the Company in the Executive's base salary as
      in effect on the date hereof or as the same may be increased from time to
      time during the terms of this Agreement;

           (iii)  any failure by the Company to continue in effect any benefit
      plan or arrangement (including, without limitation, the Company's
      Employee Stock Purchase Plan, Employee Thrift Plan, DSC Communications
      Corporation Employee Stock Ownership Plan and life insurance, medical,
      dental, accident and disability plans) in which the Executive is
      participating at the time of a Change in Control of the Company, or any
      other plan or arrangement providing the Executive with benefits that are
      no less favorable, (hereinafter referred to as "Benefit Plans"), or the
      taking of any action by the Company which would adversely affect the
      Executive's participation in or materially reduce the Executive's
      benefits under any such Benefit Plan or deprive the Executive or any
      material fringe benefit or perquisite of office enjoyed by the Executive
      at the time a Change in Control of the Company;

           (iv)  any failure by the Company to continue in effect any incentive
      plan or arrangement (including, without limitation, the Company's bonus
      and contingent bonus arrangements, including the supplemental

                                      -5-


<PAGE>   6

      compensation policy of the Company, and credits and the right to receive
      performance awards and similar incentive compensation benefits) in which
      the Executive is participating at the time of a Change in Control of the
      Company, or any other plans or arrangements providing him with
      substantially similar benefits, (hereinafter referred to as "Incentive
      Plans") or the taking of any action by the Company which would adversely
      affect the Executive's participation in any such Incentive Plan or reduce
      the Executive's benefits under any such Incentive Plan, expressed as a
      percentage of his base salary, by more than 10 percentage points in any
      fiscal year as compared to the average of the two highest of the three
      immediately preceding fiscal years;

           (v)  any failure by the Company to continue in effect any plan or
      arrangement to receive securities of the Company (including, without
      limitation, the Company's 1979 Stock Option Plan, 1981 Stock Option Plan,
      1984 Stock Option Plan, 1988 Stock Option Plan, 1993 Stock Option and
      Securities Award Plan, and any other plan or arrangement to receive and
      exercise stock options, stock appreciation rights, restricted stock or
      grants thereof in which the Executive is participating at the time of a
      Change in Control of the Company, or any other plan or arrangement
      providing him with substantially similar benefits, (hereinafter referred
      to as "Securities Plans") or the taking of any action by the Company
      which would adversely affect the Executive's participation in or
      materially reduce the Executive's benefits under any such Securities
      Plan;

           (vi)  a relocation of the Company's principal executive offices to a
      location more than fifty (50) miles from the location of the principal
      executive offices prior to a Change in Control of the Company, or the
      Executive's relocation to any place more than fifty (50) miles from the
      location at which the Executive performed the Executive's duties prior to
      a Change in Control of the Company, except for required travel by the
      Executive on the Company's business to an extent substantially consistent
      with the Executive's business travel obligations at the time of a Change
      in Control of the Company;

           (vii)  any failure by the Company to provide the Executive with at
      least fifty percent (50%) of the number of annual paid vacation days to
      which the Executive is entitled at the time a Change in Control of the
      Company occurs;

           (viii)  any material breach by the Company of any provision of this
      Agreement;

           (ix)  any failure by the Company to obtain the assumption of this
      Agreement by any successor or assign of the Company; or


                                      -6-


<PAGE>   7


           (x)  any purported termination of the Executive's employment which
      is not effected pursuant to a Notice of Termination satisfying the
      requirements of Section 3(f), and for purposes of this Agreement, no such
      purported termination shall be effective.

     For purposes of this subsection (e), an isolated, immaterial, and
inadvertent action not taken in bad faith by the Company in violation of
paragraph (ii), (iii), (iv), (v) or (vii) of this subsection that is remedied
by the Company promptly after receipt of notice thereof given by the Executive
shall not be considered Good Reason for the Executive's termination of
employment with the Company.  In the event the Executive terminates his
employment for Good Reason hereunder, then notwithstanding that the Executive
may also retire for purposes of the Benefit Plans, Incentive Plans or
Securities Plans, the Executive shall be deemed to have terminated his
employment for Good Reason for purposes of this Agreement.

     (f)  Notice of Termination.  Any termination of the Executive by the
Company pursuant to Section 3(b), 3(c) or 3(d) shall be communicated by a
Notice of Termination.  For purposes of this Agreement, a "Notice of
Termination" shall mean a written notice which shall indicate those specific
termination provisions in this Agreement relied upon and which sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated.
For purposes of this Agreement, no such purported termination by the Company
shall be effective without such Notice of Termination.

     (g)  Date of Termination.  "Date of Termination" shall mean (i) if this
Agreement is terminated by the Company for Disability, 30 days after Notice of
Termination is given to the Executive (provided that the Executive shall not
have returned to the performance of the Executive's duties on a full-time basis
during such 30-day period) or (ii) if the Executive's employment is terminated
by the Company for any other reason, the date on which a Notice of Termination
is given; provided, however that if within 30 days after any Notice of
termination is given to the Executive by the Company, the Executive notifies
the Company that a dispute exists concerning the termination, the Date of
Termination shall be the date the dispute is finally determined, whether by
mutual agreement by the parties or upon final judgment, order or decree of a
court of competent jurisdiction (the time for appeal therefrom having expired
and no appeal having been perfected).

4.   TERMINATION UPON DISABILITY.  In the event of the termination of the
Executive's employment with the Company by the Company or by the Executive for
Disability, the Executive shall be entitled to continue to receive payment of
his annual base salary, at the then current rate, for a period of two years
following such termination in accordance with the ordinary payroll practices of
the Company, reduced by (i) the amount of any salary replacement payments made

                                      -7-


<PAGE>   8

to Executive under a disability plan of the Company which is provided at no
cost to the Executive and (ii) any social security or other governmental
disability benefits received by the Executive.

5.   SEVERANCE COMPENSATION
     UPON TERMINATION OF EMPLOYMENT.

     If the Company shall terminate the Executive's employment other than as a
result of (i) the Executive's Retirement; (ii) the Executive's death; (iii) the
Executive's Disability; or (iv) the Executive's termination by the Company for
Cause, or if the Executive shall terminate his employment for Good Reason, then
the Company shall pay to the Executive as severance pay in a lump sum, in cash,
on the fifth day following the Date of Termination, an amount equal to three
times the Executive's "base amount" (as defined in Section 280G(b) of the
Internal Revenue Code of 1986, as amended (the "Code")) determined with respect
to a base period ending on the last day of the last fiscal year prior to such
Date of Termination; provided, however, that in no event shall the amount of
such payment be less than three times Executive's annual base salary at the
higher of the rate in effect (i) immediately prior to the Date of Termination
or (ii) on the date six months prior to the Date of Termination.

6.   1994 LONG-TERM INCENTIVE PLAN.

     For purposes of the DSC Communications Corporation 1994 Long-Term
Incentive Compensation Plan and the definitions of "Disability" and
"Termination Without Cause" therein, this Agreement shall constitute
Executive's Employment Agreement.

7.   EXCISE TAXES.

     If the payments made pursuant to paragraph 5 of this Agreement, when
aggregated with any other payments made to Executive, would result in the
imposition of an excise tax under Section 4999 of the Code, the Company shall
pay to the Executive, in addition to amounts otherwise payable under this
Agreement, an amount sufficient, after federal and state income taxes, to pay
the excise tax so payable and all directly related interest and penalties such
that the net amount to the Executive would be the same as if no excise tax had
been imposed.  Upon such time as Executive determines that the Company shall
owe Executive money for the payment of excise taxes pursuant to this Section 7,
Executive shall deliver to the Company a completed form of Executive's federal
or state tax return, as applicable, in the form in which it will be filed.  The
Company shall, within five days of receiving such tax return, pay to Executive
the amount of any excise tax to be paid by Executive as shown on such
Executive's tax return.


                                      -8-


<PAGE>   9


8.   NO OBLIGATION TO MITIGATE DAMAGES;
     NO EFFECT ON OTHER CONTRACTUAL RIGHTS.

     (a)  The Executive shall not be required to mitigate damages or the amount
of any payment provided for under this Agreement by seeking other employment or
otherwise, nor shall the amount of any payment provided for under this
Agreement be reduced by any compensation earned by the Executive as the result
of employment by another employer after the Date of Termination, or otherwise.

     (b)  The provisions of this Agreement, and any payment provided for
hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish the Executive's existing rights, or rights which would accrue solely
as a result of the passage of time, under any Benefit Plan, Incentive Plan or
Securities Plan, employment agreement or other contract, plan or agreement with
or of the Company.

9.   SUCCESSORS.

     (a)  The Company will require any successor or assign (whether direct or
indirect, by purchase, merger, consolation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance satisfactory to the Executive, expressly, absolutely and
unconditionally to assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession or assignment had taken place.  Any failure of the
Company to obtain such agreement prior to the effectiveness of any such
succession or assignment shall be a material breach of this Agreement and shall
entitle the Executive to terminate the Executive's employment for Good Reason
and receive the compensation provided for in Section 5 hereof.  As used in this
Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor or assign to its business and/or assets as aforesaid which executes
and delivers the agreement provided for in this Section 9 or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation of
law.

     (b)  This Agreement shall inure to the benefit of and be enforceable by
the Executive's personal and legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.  If the Executive
should die while any amounts are still payable to him hereunder all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to the Executive's devisee, legatee or other designee,
or, if there be no such designee, to the Executive's estate.


                                      -9-


<PAGE>   10


10.  NOTICE.

     For purposes of this Agreement, notices and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States registered mail,
return receipt requested, postage prepaid, as follows:

     If to the Company:

     DSC Communications Corporation
     1000 Coit Road
     Plano, TX 75075
     Attention:  Secretary and General Counsel


     If to the Executive:

     _____________________
     c/o DSC Communications Corporation
     1000 Coit Road
     Plano, TX 75075

or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.

11.  MISCELLANEOUS.

     No provisions of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing signed by
the Executive and the Company.  No waiver by either party hereto at any time of
any breach by the other party hereto of, or in compliance with, any condition
or provision of this Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the same
time or at any prior or subsequent time.  No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter
hereof have been made by either party which are not set forth expressly in this
Agreement.  This Agreement shall be governed by and construed in accordance
with the laws of the State of Texas, without giving effect to any principles of
conflicts of law.

12.  CONFLICT IN BENEFITS.

     Except as otherwise provided in Sections 4 and 6 of this Agreement, this
Agreement is not intended to and shall not affect, limit or terminate any other
agreement or arrangement between the Executive and the Company presently in
effect or hereafter entered into.

                                      -10-


<PAGE>   11



13.  VALIDITY.

     The invalidity or unenforceability of any provisions of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.

14.  LEGAL FEES AND EXPENSES.

     The Company shall pay all legal fees and expenses which the Executive may
incur as a result of the Company's contesting the validity, enforceability or
the Executive's interpretation of, or determinations under, this Agreement.

15.  EFFECTIVE DATE.

     This Agreement shall become effective upon execution.

16.  COUNTERPARTS.

     This agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original but all of which together will constitute one
and the same instrument.

17.  NO GUARANTEE OF EMPLOYMENT.

     Neither this Agreement or any action taken hereunder shall be construed as
giving the Executive the right to be retained in employment with the Company,
nor shall it interfere with either the Company's right to terminate the
employment of the Executive at any time or the Executive's right to terminate
his employment at any time.

18.  NO ASSIGNMENT BY PARTICIPANT.

     The Executive's rights and interest under this Agreement shall not be
assignable (in law or in equity) or subject to any manner of alienation, sale,
transfer, claims or creditors, pledge, attachment, garnishment, levy, execution
or encumbrances of any kind, and any attempt by the Executive or other person
to do so shall be void.

19.  WAIVER.

     The Executive's or the Company's failure to insist upon strict compliance
with any provision of this Agreement shall not be deemed a waiver of such
provision or any other provision of this Agreement.  Any waiver of any
provision of this Agreement shall not be deemed to be a waiver of any other
provision, and

                                      -11-


<PAGE>   12

any waiver of default in any provision of this Agreement shall not be deemed to
be a waiver of any later default thereof or of any other provision.

20.  WITHHOLDING.

     All amounts paid pursuant to this Agreement shall be subject to
withholding for taxes (federal, state, or local or otherwise) to the extent
required by applicable law.

21.  HEADINGS.

     The headings of this agreement have been inserted for convenience of
reference only and are to be ignored in the construction of the provisions
hereof.

22.  NUMBER AND GENDER.

     The use of the singular shall be interpreted to include the plural and
plural the singular, as the context requires.  The use of the masculine,
feminine or neuter shall be interpreted to include the masculine, feminine or
neuter as the context shall require.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.

                                DSC COMMUNICATIONS CORPORATION


                                By:________________________________


                                EXECUTIVE:


                                ___________________________________




                                      -12-