<PAGE>   1
                                                                   EXHIBIT 10.17


                    HEARTLAND WIRELESS COMMUNICATIONS, INC.
                    PERFORMANCE INCENTIVE COMPENSATION PLAN


                                  I.  PURPOSE

         The purpose of the Heartland Wireless Communications, Inc. Performance
Incentive Compensation Plan (the "Plan"), is to advance the interests of
Heartland Wireless Communications, Inc. (the "Company"), by strengthening,
through the payment of incentive awards, the linkage between executives of the
Company and stockholders of the Company, the decision-making focus of
executives of the Company upon improving stockholder wealth, and the ability of
the Company to attract and retain those key employees upon whose judgment,
initiative, and efforts the successful growth and profitability of the Company
depends.


                                II.  DEFINITIONS

         a.      "AWARD" shall mean the amount payable to a Participant for a
Plan Year pursuant to the Plan.

         b.      "BASE COMPENSATION" shall mean the total salary or wages paid
by the Company or a Subsidiary for employment services during a Plan Year,
excluding any payments under this Plan or similar forms of additional
compensation, or any fringe benefits reportable on Form W-2 for federal income
tax purposes.

         c.      "BENEFICIARY" shall mean the beneficiary or beneficiaries
designated in accordance with Section XIII to receive any amount payable under
the Plan after the death of a Participant.

         d.      "BOARD" shall mean the board of Directors of the Company.

         e.      "CEO" shall mean the Chief Executive Officer of the Company.

         f.      "COMMITTEE" shall mean the Compensation Committee of the Board
of Directors of the Company, or any subcommittee thereof, as such Committee or
subcommittee shall be comprised from time to time.

         g.      "COMPANY" shall mean Heartland Wireless Communications, Inc.,
a Delaware corporation, its successors and survivors resulting from any merger
or acquisition of Heartland Wireless Communication, Inc. with or by any other
corporation or other entity or enterprise.

         h.      "CORPORATE/BUSINESS UNIT EARNINGS GROWTH OBJECTIVES" shall
mean the corporate and/or business unit earnings and/or EBITDA growth
objectives established by the Committee for the purpose of determining any
Award payable to a Participant for a Plan Year under the terms of the Plan.


                                      1

<PAGE>   2
         i.      "DISABILITY" shall mean incapacity resulting in the
Participant's being unable to engage in gainful employment at his usual
occupation by reason of any medically demonstrable physical or mental
condition, excluding, however, incapacity contracted, suffered or incurred
while the Participant was engaged in, or which resulted from having engaged in,
a felonious enterprise; incapacity resulting from or consisting of chronic
alcoholism or addiction to drugs of abuse; and incapacity resulting from an
intentionally self-inflicted injury or illness.

         j.      "EBITDA" shall mean the consolidated earnings before interest,
taxes, depreciation and amortization of Heartland Wireless Communications, Inc.
as of the Plan Year, as reflected in its unaudited financial statements as
prepared by the Company's Chief Financial Officer and presented to the Board.

         k.      "EFFECTIVE DATE" shall mean January 1, 1998.

         l.      "ELIGIBLE EMPLOYEE" shall mean any officer or key management
employee of the Company or a Subsidiary who is a regular full-time employee of
the Company or a Subsidiary.  A director of the Company or a Subsidiary is not
an Eligible Employee unless he is also a regular full-time salaried employee of
the Company or a Subsidiary.  A "full time" employee means any employee who is
customarily employed more than 20 hours per week and at least six months per
year.

         m.      "INCENTIVE AWARD CLASSIFICATION" shall mean the classification
of Officers and other Participants established and used for payment of Awards
under Section VI.

         n.      "INCENTIVE PERFORMANCE OBJECTIVES" shall mean, collectively,
Corporate/Business Unit Earnings Growth Objectives and Specified Annual
Performance Objectives for a particular Participant.

         o.      "OFFICER" shall mean any Board-appointed officer of the
Company and any other executive of the Company or a Subsidiary whose individual
compensation during the Plan Year would be required to be disclosed in the
Company's corresponding annual proxy statement.

         p.      "PARTICIPANT" shall mean any Eligible Employee who is an
Officer and is designated by the Committee for participation in the Plan and
any other Eligible Employee designated by the Committee or by the CEO for
participation in the Plan, in each case for the Plan Year with respect to which
an Award may be made and which has not been paid, forfeited or otherwise
terminated or satisfied under the Plan.

         q.      "PLAN" shall mean the Heartland Wireless Communication, Inc.
Performance Incentive Compensation Plan, as set forth in this instrument, as
amended from time to time.

         r.      "PLAN YEAR" shall mean the year, which shall be the same as
the Company's fiscal year for tax and financial reporting purposes, to be used
to measure actual performance against Incentive Performance Objectives and to
determine the amount of Awards for Participants.





                                       2
<PAGE>   3
         s.      "SPECIFIED ANNUAL PERFORMANCE OBJECTIVES" shall mean the
specific performance objectives established by the Committee or the CEO, other
than Corporate/Business Unit Earnings Growth objectives, for purposes of
determining any Award payable to a Participant for a Plan Year under the terms
of the Plan.

         t.      "SUBSIDIARY" shall mean a corporation of which fifty percent
(50%) or more of the issued and outstanding voting stock is owned (directly or
indirectly) by the Company.


                              III.  ADMINISTRATION

         Administration of the Plan shall be by the Committee, which shall, in
applying and interpreting the provisions of the Plan, have full power and
authority to construe, interpret and carry out the provisions of the Plan. All
decisions, interpretations and actions of the Committee under the Plan shall be
at the Committee's sole and absolute discretion and shall be final, conclusive
and binding upon all parties.  The generality of the provisions of the
immediately preceding sentence shall not be deemed to be limited by any
reference to the Committee's discretion in any other provision of the Plan.

         No member of the Committee shall be jointly or severally liable by
reason of any contract or other instrument executed by him or on his behalf in
his capacity as a member of the Committee, nor for any mistake of judgment made
in good faith, and the Company shall indemnify and hold harmless each member of
the Committee and each other officer, employee and director of the Company to
whom any duty or act relating to the administration of the Plan may be
allocated or delegated, against any cost or expense (including counsel fees) or
liability (including any sum paid in settlement of the claim with the approval
of the Board) arising out of any act or omission to act in connection with the
Plan, unless arising out of such person's or persons' own fraud or bad faith.


                       IV.  ELIGIBILITY FOR PARTICIPATION

         In the case of Eligible Employees who are Officers, participation
recommendations shall be provided to the Committee by the CEO and approved or
rejected by the Committee as soon as practicable after the beginning of each
Plan Year (or, if a person becomes an Officer during a Plan Year, as soon as
practicable after the person becomes an Officer).  In the case of all other
Eligible Employees, participation recommendations shall be made by the CEO as
soon as practicable after the beginning of each Plan Year (or portion thereof)
for which participation has been approved.  Each Eligible Employee shall be
notified of his participation in the Plan as soon as practicable after approval
of his participation for any Plan Year (or portion thereof) for which his
participation has been approved.





                                       3
<PAGE>   4
                      V.  INCENTIVE PERFORMANCE OBJECTIVES

         At the beginning of each Plan Year, the Committee shall establish
Corporate and Business Unit Earnings Growth Objectives for the Plan Year.  Such
Objectives shall be expressed as increases in EBITDA before extraordinary or
nonrecurring items as such items are determined by the Committee.

         In addition, the Committee or the CEO may establish Specified Annual
Performance Objectives for each Participant for the Plan Year.


                      VI.  INCENTIVE AWARD CLASSIFICATION

         At the beginning of each Plan Year, (or, if an Eligible Employee
becomes a Participant during a Plan Year, on or before the date that Eligible
Employee becomes a Participant), the Committee shall assign each Participant
who is an Officer, and the Committee or the CEO shall assign each other
Participant, to an Incentive Award Classification which shall determine the
percentage of Base Compensation payable under the Plan for achievement of the
Incentive Performance Objectives established for the Participant for the Plan
Year.

         The following table sets forth the percentage of Base Compensation
payable under the Plan as an Award for achievement of the Incentive Performance
Objectives established for a Participant for the Plan Year:

<TABLE>
<CAPTION>
                                   Incentive Performance Award
                                        As a Percentage of
               Classification           Base Compensation
               --------------           -----------------
             <S>                  <C>

                      1                       50.0%
                      2                       35.0%
                      3                       25.0%
                      4                       20.0%
                      5                       15.0%
</TABLE>



                         VII.  DETERMINATION OF AWARDS

         During the first quarter of each Plan Year (or, if an Eligible Person
becomes a Participant during a Plan Year, on or before the date that Eligible
Employee becomes a Participant), the Committee, or, in the case of any Eligible
Employee who the CEO is entitled to approve as a Participant, the CEO shall
establish one or more formulas for determining the amount of Awards for the
Plan Year based upon the extent of attainment of the Corporate/Business Unit
Earnings Growth Objectives and Specified Annual Performance Objectives for the
Plan Year.





                                       4
<PAGE>   5
         Specified Annual Performance Objectives shall constitute no greater
than fifty percent (50%) of a Participant's Award and shall be based upon other
objective or subjective criteria which the Committee or CEO deems appropriate
for each Participant.

         The Award for a Participant shall be determined according to actual
performance of the Company and/or Business Unit and the Participant when
compared with the Incentive Performance Objectives for the Company and/or
Business Unit and Participant.  The Participant's Award shall be determined by
(1) multiplying the Participant's Base Compensation during the Plan Year by the
appropriate percentage corresponding to the Participant's Incentive Award
Classification from Section VI (with the resulting product of this calculation
referred to as the "Plan Year Base"), and (2) then multiplying the Plan Year
Base by the percentage by which the Participant and the Company/Business Unit
achieved their respective Incentive Performance Objectives based upon the
following table:

<TABLE>
<CAPTION>
           Percentage of Achievement of                  Percentage of
         Incentive Performance Objectives*              Plan Year Base
         ---------------------------------              --------------

         <S>                                           <C>
                    Above 150%                               150%
                           50%                                50%
                 Less than 50%                                 0%
</TABLE>

*A linear interpolation to the nearest one percent shall be applied to
determine the appropriate percentage for performance not specified on the
table.

         Notwithstanding the foregoing provisions of this Section, the
following provisions shall apply:

         (1)     In the event of extraordinary or nonrecurring items affecting
EBITDA and/or earnings or other financial line item as determined by the
Committee or CEO, the Committee or the CEO may, in its or his discretion,
modify the amount of the Awards, before payment thereof, for any Participant
designated by the Committee or by the CEO, as the case may be.

         (2)     In the event of a change in employment status of a Participant
during any Plan Year, the Committee or, in the case of Participants whose
participation in the Plan may be approved by the CEO, the CEO may, in its or
his discretion, adjust the Award determinants for the Participant from those
set at the beginning of the Plan Year to determinants based upon the
Participant's new status.  Alternatively, the Committee or the CEO, as the case
may be, may in its or his discretion, prorate the Award payable to the
Participant in accordance with services rendered by the Participant during the
Plan Year in each status.

         As soon as practicable after the establishment of the formula(s) and
other criteria for determining Awards for the Plan Year or any other action in
accordance with the preceding provisions of this Section, each affected
Participant shall be notified in writing of the formula(s) and other criteria
or action applicable to the Participant.





                                       5
<PAGE>   6
         As soon as practicable after the end of each Plan Year, the amount of
any Award payable for the Plan Year to each Participant shall be determined,
and each Participant shall be notified in writing thereof.

         Notwithstanding any other provision of the Plan, in the case of a
Participant's or an Eligible Employee's separation from service with the
Company or a Subsidiary for any reason other than Disability or death, such
Participant or Eligible Employee shall become ineligible to participate in the
Plan and shall receive no Award for any Plan Year that has not ended prior to
the Participant's or Eligible Employee's separation from service.  In the case
of separation from service due to Disability or death, a Participant shall be
eligible to receive an Award covering the period of time that he was employed
and was a Participant in the Plan Year during which the separation occurs.


                            VIII.  PAYMENT OF AWARDS

         Awards shall be paid as soon as practicable after the close of the
Plan Year, except that the Committee may, in its sole discretion, direct that
payments to the Participants be made during December of the Plan Year in the
amount of all or any portion specified by the Committee of the estimated Award
for that Plan Year, subject to adjustment as soon as practicable after the end
of the Plan Year and the determination of the exact amount of the Award
therefor.

         No Participant shall have the unconditional right to an Award
hereunder until the Plan Year has concluded and the exact amount of the Award
has been determined by the Committee.


                     IX.  AMENDMENT AND TERMINATION OF PLAN

         The Board reserves the right, at any time, to amend, suspend or
terminate the Plan, in whole or in part, in any manner, and for any reason, and
without the consent of any Participant, Eligible Employee or Beneficiary or
other person; provided, that no such amendment, suspension or termination shall
adversely affect the payment of any amount for a Plan Year ending prior to the
action of the Board amending, suspending or terminating the Plan.


                               X.  GOVERNING LAW

         The provisions of the Plan shall be governed and construed in
accordance with the laws of the State of Delaware.





                                       6
<PAGE>   7
                         XI.  MISCELLANEOUS PROVISIONS

         Nothing contained in the Plan shall give any employee the right to be
retained in the employment of the Company or a Subsidiary or affect the right
of the Company or a Subsidiary to dismiss any employee.  The Plan shall not
constitute a contract between the Company or a Subsidiary and any employee.
Except as provided in Section VII, no Participant shall receive any right to be
granted an Award hereunder.  No Award shall be considered as compensation under
any employee benefit plan of the Company or a Subsidiary, except as may be
otherwise provided in such employee benefit plan.  No reference in the Plan to
any other plan or program maintained by the Company shall be deemed to give any
Participant or other person a right to benefits under such other plan or
program.


                        XII.  NO ALIENATION OF BENEFITS

         Except insofar as may otherwise be required by law, no amount payable
at any time under the Plan shall be subject in any manner to alienation by
anticipation, sale, transfer, assignment, bankruptcy, pledge, attachment,
charge or encumbrance of any kind, nor in any manner be subject to the debts or
liabilities of a Participant or Beneficiary, and any attempt to so alienate or
subject any such amount, whether presently or thereafter payable, shall be
void.  If a Participant or Beneficiary shall attempt to, or shall, alienate,
sell, transfer, assign, pledge, attach, charge or otherwise encumber any amount
payable under the Plan, or any part thereof, or if by reason of bankruptcy or
other event happening at any such time such amount would be made subject to his
debts or liabilities or would otherwise not be enjoyed by him, then, in the
event that Participant is an Officer, the Committee, and in all other cases,
the Committee or the CEO, may, if it or he so elects, direct that such amount
be withheld and that all or any part thereof be paid or applied to or for the
benefit of such Participant or Beneficiary, his spouse, children or other
dependents, or any of them, in such a manner and proportion as the Committee or
the CEO, as the case may be, may deem proper.


                      XIII.  DESIGNATION OF BENEFICIARIES

         Each Participant shall file with the Secretary of the Company a
written designation of one or more persons as the Beneficiary who shall be
entitled to receive any Award payable under the Plan after his death.  A
Participant may, from time to time, revoke or change his Beneficiary
designation without the consent of any prior Beneficiary by filing a new
designation with the Company.





                                       7
<PAGE>   8
         The last such designation received by the Company shall be
controlling; except that no designation, or change or revocation thereof, shall
be effective unless received by the Company prior to the Participant's death,
and in no event shall it be effective as of any date prior to such receipt.

         If no designation is in effect at the time of a Participant's death,
or if no designated Beneficiary survives the Participant, or if such
designation, in the Company's discretion, conflicts with applicable law, the
Participant's estate shall be deemed to have been designated his Beneficiary
and shall receive any Award payable under the Plan after his death.  If the
Committee is in doubt as to the right of any person to receive such an amount,
the Company may retain such amount, without liability for any interest thereon,
until the rights thereto are determined, or the Company may pay such amount
into any court of appropriate jurisdiction, and such payment shall be a
complete discharge of the liability of the Plan, the Company and the Committee
therefor.


                XIV.  PAYMENTS TO PERSON OTHER THAN PARTICIPANT

         If the Committee or, in the case of a Participant whose participation
in the Plan may be approved by the CEO, the CEO shall find that a Participant
or his Beneficiary to whom an Award is payable under the Plan is unable to care
for his affairs because of illness or accident, or is a minor, or has died,
then any payment due him or his estate (unless a prior claim therefor has been
made by a duly appointed representative) may, if the Committee or the CEO, as
the case may be, so directs, be paid to his spouse, child, a relative, an
institution maintaining custody of such person or any other person deemed by
the Committee or the CEO, as the case may be, to be a proper recipient on
behalf of such person otherwise entitled to payment.  Any such payment shall be
a complete discharge of the liability of the Plan, the Company and the
committee therefor.


              XV.  NO RIGHT, TITLE OR INTEREST IN COMPANY'S ASSETS

         No Participant or Beneficiary shall have any right, title or interest
whatsoever in or to any investments which the Company or a Subsidiary may make
to aid it in meeting its obligations under the Plan.  Nothing contained in the
Plan, and no action taken pursuant to its provisions, shall create, or be
construed to create, a trust of any kind, or fiduciary relationship between the
Company or a Subsidiary and any Participant or Beneficiary or any other person.
To the extent that any person acquires a right to receive payments from the
Company under the Plan, such rights shall be no greater than the right of an
unsecured general creditor of the Company.  All payments to be made hereunder
shall be paid from the general funds of the Company, and no special or separate
funds shall be established, and no segregation of assets shall be made, to
assure payment thereof.





                                       8