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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )

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Dear Shareholders:

        You are cordially invited to attend our 2010 annual meeting of shareholders of Telephone and Data Systems, Inc. ("TDS") on Wednesday, May 26, 2010, at 10:00 a.m., Chicago time, at The Standard Club, 320 South Plymouth Court, Chicago, Illinois.

        The formal notice of the meeting and our board of directors' proxy statement and our 2009 annual report to shareholders are enclosed. Accompanying the proxy statement are the audited financial statements and certain other financial information for the year ended December 31, 2009, as required by the rules and regulations of the Securities and Exchange Commission ("SEC"). At our 2010 annual meeting, shareholders are being asked to take the following actions:

1.

elect members of the board of directors nominated by the TDS board of directors and named in the attached proxy statement; and



2.

ratify the selection of independent registered public accountants for the current fiscal year.

        The board of directors recommends a vote "FOR" its nominees for election as directors and "FOR" the proposal to ratify accountants.

        In addition, as required by the rules of the SEC, the proxy statement includes a proposal submitted by a shareholder of TDS relating to calling meetings by shareholders. The board of directors recommends that you vote "AGAINST" this proposal.

        We would like to have as many shareholders as possible represented at the meeting. Therefore, whether or not you plan to attend the meeting, please sign and return the enclosed proxy card(s), or vote on the Internet in accordance with the instructions set forth on the proxy card(s).

        We look forward to visiting with you at the annual meeting.

Please sign and return the applicable enclosed proxy card(s) promptly or
vote on the Internet using the instructions on the proxy card(s)

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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT
AND
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE SHAREHOLDER MEETING TO BE HELD ON MAY 26, 2010

TO THE SHAREHOLDERS OF

TELEPHONE AND DATA SYSTEMS, INC.

        The 2010 annual meeting of shareholders of Telephone and Data Systems, Inc., a Delaware corporation, will be held at The Standard Club, 320 South Plymouth Court, Chicago, Illinois, on Wednesday, May 26, 2010, at 10:00 a.m., Chicago time, for the following purposes:

1.

To elect members of the board of directors nominated by the TDS board of directors and named in the attached proxy statement. Your board of directors recommends that you vote FOR the directors nominated by the TDS board of directors.



2.

To consider and ratify the selection of PricewaterhouseCoopers LLP as our independent registered public accountants for the year ending December 31, 2010. Your board of directors recommends that you vote FOR this proposal.



3.

If properly presented at the Annual Meeting, to consider and vote upon a proposal submitted by a shareholder of TDS relating to calling of meetings by shareholders. Your board of directors recommends that you vote AGAINST this proposal.



4.

To transact such other business as may properly come before the meeting or any adjournments thereof.

        We are first mailing this notice of annual meeting and proxy statement to you on or about April 23, 2010.

        We have fixed the close of business on March 30, 2010, as the record date for the determination of shareholders entitled to notice of, and to vote at, the annual meeting or any adjournments thereof.

        The following additional information is being provided as required by SEC rules:

        The proxy statement and annual report to shareholders are available at www.teldta.com under Investor Relations—Proxy Vote, or at www.teldta.com/proxyvote.

        The following items have been posted to this Web site:

1.

Proxy Statement for the 2010 Annual Meeting



2.

Annual Report to Shareholders for 2009



3.

Forms of Proxy Cards

        Any control/identification numbers that you need to vote are set forth on your proxy card(s) if you are a record holder, or on your voting instruction card if you hold shares through a broker, dealer or bank.

        The location where the annual meeting will be held is the Standard Club in Chicago, Illinois. This is located in the Chicago loop area between Jackson Boulevard and Van Buren Street at 320 South Plymouth Court, which is between State Street and Dearborn Street.

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SUMMARY

        The following is a summary of the actions being taken at the 2010 annual meeting and does not include all of the information that may be important to you. You should carefully read this entire proxy statement and not rely solely on the following summary.

Proposal 1—Election of Directors

        Under TDS' Restated Certificate of Incorporation, as amended, the terms of all incumbent directors will expire at the 2010 annual meeting.

        Holders of Series A Common Shares and Preferred Shares, voting as a group, will be entitled to elect eight directors. Your board of directors has nominated the following incumbent directors for election by the holders of Series A Common Shares and Preferred Shares : LeRoy T. Carlson, Jr., Letitia G. Carlson, M.D., Prudence E. Carlson, Walter C.D. Carlson, Kenneth R. Meyers, Donald C. Nebergall, George W. Off and Mitchell H. Saranow.

        Holders of Common Shares and Special Common Shares, voting as a group, will be entitled to elect four directors. Your board of directors has nominated the following incumbent directors for election by the holders of Common Shares and Special Common Shares: Clarence A. Davis, Christopher D. O'Leary, Gary L. Sugarman and Herbert S. Wander. Clarence A. Davis and Gary L. Sugarman were nominated pursuant to the terms of a Settlement Agreement between TDS and GAMCO Asset Management, Inc., as discussed below under "Settlement Agreement."

        Your board of directors recommends that you vote "FOR" its nominees for election as directors.

Proposal 2—Ratification of Independent Registered Public Accounting Firm for 2010

        As in prior years, shareholders are being asked to ratify PricewaterhouseCoopers LLP as our independent registered public accounting firm for the year ending December 31, 2010.

        Your board of directors recommends that you vote "FOR" this proposal.

Proposal 3—Proposal Submitted by a Shareholder

        As required by the rules of the SEC, the proxy statement includes a proposal submitted by a shareholder of TDS relating to calling meetings by shareholders.

        Your board of directors recommends that you vote "AGAINST" this proposal.

VOTING INFORMATION

What is the record date for the meeting?

        The close of business on March 30, 2010 is the record date for the determination of shareholders entitled to notice of, and to vote at, the annual meeting or any adjournments thereof.

        A complete list of shareholders entitled to vote at the annual meeting, arranged in alphabetical order and by voting group, showing the address of and number of shares held by each shareholder, will be made available at the offices of TDS, 30 North LaSalle Street, 40th Floor, Chicago, Illinois 60602, for examination by any shareholder during normal business hours, for a period of at least ten days prior to the annual meeting.

What shares of stock entitle holders to vote at the meeting?

        We have the following classes of stock outstanding, each of which entitles holders to vote at the meeting:

•

Common Shares;



•

Special Common Shares;



•

Series A Common Shares; and



•

Preferred Shares.

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        The Common Shares are listed on the New York Stock Exchange ("NYSE") under the symbol "TDS." The Special Common Shares are listed on the NYSE under the symbol "TDS.S."

        No public market exists for the Series A Common Shares, but the Series A Common Shares are convertible on a share-for-share basis into Common Shares or Special Common Shares.

        No public market exists for the Preferred Shares. The Preferred Shares are divided into series, none of which is currently convertible into any class of common stock. All holders of outstanding Preferred Shares vote together with the holders of Common Shares and Series A Common Shares, except in the election of directors. In the election of directors, all holders of outstanding Preferred Shares vote together with the holders of Series A Common Shares.

What is the voting power of the outstanding shares in the election of directors?

        The following shows certain information relating to the outstanding shares and voting power of such shares in the election of directors as of the record date:

What is the voting power of the outstanding shares in matters other than the election of directors?

        The following shows certain information relating to the outstanding shares and voting power of such shares in matters other than the election of directors as of the record date:

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*

Less than .1%

        Other than as required by law or regulation, holders of Special Common Shares do not have any right to vote on any matters except in the election of certain directors, as described above. Accordingly, actions submitted to a vote of shareholders other than the election of directors will be voted on only by holders of Common Shares, Series A Common Shares and Preferred Shares.

How may shareholders vote with respect to the election of directors in Proposal 1?

        Shareholders may, with respect to directors to be elected by such shareholders:

•

vote FOR the election of such director nominees, or

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•

WITHHOLD authority to vote for such director nominees.

        Your board of directors recommends a vote FOR its nominees for election as directors.

How may shareholders vote with respect to the ratification of our independent registered public accounting firm for 2010 in Proposal 2?

        Shareholders may, with respect to the proposal to ratify the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2010:

•

vote FOR,



•

vote AGAINST, or



•

ABSTAIN from voting on this proposal.

        Your board of directors recommends a vote FOR this proposal.

How may shareholders vote with respect to the shareholder proposal in Proposal 3?

        Shareholders may, with respect to the shareholder proposal:

•

vote FOR,



•

vote AGAINST, or



•

ABSTAIN from voting on this proposal.

Your board of directors recommends a vote AGAINST this proposal.

How does the TDS Voting Trust intend to vote?

        The Voting Trust under Agreement dated June 30, 1989, as amended (the "TDS Voting Trust"), holds 6,135,552 Series A Common Shares on the record date, representing approximately 94.5% of the Series A Common Shares. By reason of such holding, the TDS Voting Trust has the voting power to elect all of the directors to be elected by the holders of Series A Common Shares and Preferred Shares and has approximately 53.5% of the voting power with respect to matters other than the election of directors. The TDS Voting Trust holds 6,077,152 Special Common Shares on the record date, representing approximately 12.3% of the Special Common Shares. By reason of such holding, the TDS Voting Trust has approximately 6.1% of the voting power with respect to the election of directors elected by the holders of Common Shares and Special Common Shares. The TDS Voting Trust does not currently own Common Shares.

        The TDS Voting Trust has advised us that it intends to vote:

•

FOR the board of directors' nominees for election by the holders of Series A Common Shares and Preferred Shares,



•

FOR the board of directors' nominees for election by the holders of Common Shares and Special Common Shares,



•

FOR the proposal to ratify the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2010, and



•

AGAINST the shareholder proposal.

How do I vote?

        Proxies are being requested from the holders of Common Shares in connection with the election of four directors in Proposal 1 and in connection with Proposal 2 and Proposal 3.

        Proxies are being requested from the holders of Special Common Shares only in connection with the election of four directors in Proposal 1.

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        Proxies are being requested from the holders of Series A Common Shares and Preferred Shares in connection with the election of eight directors in Proposal 1 and in connection with Proposal 2 and Proposal 3.

        Whether or not you intend to be present at the 2010 annual meeting, please sign and mail your proxy card(s) in the enclosed self-addressed envelope to Computershare Investor Services LLC, P.O. Box 43126, Providence, Rhode Island 02940-5138, or vote on the Internet using the control/identification number on your proxy card(s) and in accordance with the instructions set forth on the proxy card(s). If you hold more than one class of our shares, you will find enclosed a separate proxy card for each holding. To assure that all your shares are represented, please vote on the Internet or return the enclosed proxy card(s) by mail as follows:

•

a proxy card for Common Shares, including Common Shares owned through the TDS dividend reinvestment plan and through the TDS tax-deferred savings plan;



•

a proxy card for Special Common Shares, including Special Common Shares owned through the TDS dividend reinvestment plan and through the TDS tax-deferred savings plan;



•

a proxy card for Series A Common Shares, including Series A Common Shares owned through the TDS dividend reinvestment plan; and



•

a proxy card for Preferred Shares.

How will proxies be voted?

        All properly executed and unrevoked proxies received in the enclosed form in time for our 2010 annual meeting of shareholders will be voted in the manner directed on the proxies.

        If no direction is made on the applicable proxy card(s), a proxy by any shareholder will be voted FOR the election of the board of directors' nominees to serve as directors in Proposal 1 and FOR Proposal 2 and AGAINST Proposal 3.

        Proxies given pursuant to this solicitation may be revoked at any time prior to the voting of the shares at the annual meeting by written notice to the Secretary of TDS, by submitting a later dated proxy or by attendance and voting in person at the annual meeting.

        Because the board of directors has no knowledge of any other proposals to be presented at the 2010 annual meeting and because no other proposals were received by TDS by the date specified by the advance notice provision in TDS' Bylaws, the proxy solicited by the board of directors for the 2010 annual meeting confers discretionary authority to the proxies named therein to vote on any matter that may properly come before such meeting or any adjournment, postponement, continuation or rescheduling thereof, other than the foregoing proposals.

How will my shares be voted if I own shares through a broker?

        If you are the beneficial owner of shares held in "street name" by a broker, bank, or other nominee ("broker"), such broker, as the record holder of the shares, is required to vote those shares in accordance with your instructions. If you do not give specific instructions to the broker or have standing instructions on file with the broker, under Rule 452 of the NYSE as amended in 2009, depending on the timing of certain actions, the nominee may be entitled to vote the shares with respect to "discretionary" items but will not be permitted to vote the shares with respect to "non-discretionary" items (in which case such shares will be treated as "broker non-votes"). In addition, whether the broker can or will vote your shares with respect to discretionary items if you have not given instructions to the broker and how such shares may be voted by the broker (i.e., proportionately with voting instructions received by the broker from other shareholders or pursuant to the recommendation of management, etc.) depend on the particular broker's policies. As a result, we cannot advise you whether your broker will or will not vote your shares or how it may vote the shares if it does not receive or have voting instructions from you and, accordingly, recommend that you contact your broker. In general, the ratification of auditors is a discretionary item. On the other hand, matters such as the election of directors (whether contested or not), the approval of an equity compensation plan and shareholder proposals are non-discretionary

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items. In such cases, if your broker does not have specific or standing instructions, your shares may be treated as "broker non-votes" and may not be voted on such matters. Accordingly, we urge you to provide instructions to your broker so that your votes may be counted on all matters. If your shares are held in street name, your broker will include a voting instruction card with this proxy statement. We strongly encourage you to vote your shares by following the instructions provided on the voting instruction card. Please return your voting instruction card to your broker and/or contact your broker to ensure that a proxy card is voted on your behalf.

What constitutes a quorum for the meeting?

        A majority of the voting power of shares of capital stock in matters other than the election of directors and entitled to vote, represented in person or by proxy, will constitute a quorum to permit the annual meeting to proceed. For such purposes, withheld votes and abstentions of shares entitled to vote and broker "non-votes" will be treated as present in person or represented by proxy for purposes of establishing a quorum for the meeting. If such a quorum is present or represented by proxy, the meeting can proceed. If the shares beneficially owned by the TDS Voting Trust are present in person or represented by proxy at the annual meeting, such shares will constitute a quorum at the annual meeting to permit the meeting to proceed. In addition, where a separate vote by a class or group is required with respect to a proposal, a quorum is also required with respect to such proposal for the vote to proceed with respect to such proposal.

        In the election of directors, the holders of a majority of the votes of the stock of such class or group issued and outstanding and entitled to vote with respect to such director, present in person or represented by proxy, will constitute a quorum with respect to such election. Withheld votes by shares entitled to vote with respect to a director and broker "non-votes" with respect to such director will be treated as present in person or represented by proxy for purposes of establishing a quorum for the election of such director. If Series A Common Shares beneficially owned by the TDS Voting Trust are present in person or represented by proxy at the annual meeting, such shares will constitute a quorum at the annual meeting in connection with the election of directors by the holders of Series A Common Shares and Preferred Shares. If a quorum of the holders of Common Shares and Special Common Shares is not present at the time the Annual Meeting is convened, the chairman of the meeting or holders of a majority of the voting power in matters other than the election of directors represented in person or by proxy may adjourn or postpone the Annual Meeting. If there is a proposal to adjourn or postpone the Annual Meeting by a vote of the stockholders, the persons named in the enclosed proxy will have discretionary voting authority to vote with respect to such adjournment or postponement. However, the TDS Voting Trust has the voting power to approve an adjournment or postponement.

        With respect to the proposal to ratify accountants and the shareholder proposal, the holders of a majority of the votes of the stock issued and outstanding and entitled to vote with respect to such proposals, present in person or represented by proxy, will constitute a quorum at the annual meeting in connection with such proposals. Abstentions from voting on such proposals by shares entitled to vote on such proposals and broker "non-votes" with respect to such proposals will be treated as present in person or represented by proxy for purposes of establishing a quorum for such proposals. If TDS shares beneficially owned by the TDS Voting Trust are present in person or represented by proxy at the annual meeting, such shares will constitute a quorum at the annual meeting in connection with such proposals.

        Even if a quorum is present, holders of a majority of the voting stock represented in person or by proxy may adjourn or postpone the Annual Meeting. Because it holds a majority of the voting power of all classes of stock, the TDS Voting Trust has the voting power to approve an adjournment or postponement. TDS does not currently have any expectation that the Annual Meeting would be adjourned or postponed for any reason. However, if there is a proposal to adjourn or postpone the Annual Meeting by a vote of the stockholders, the persons named in the enclosed proxy will have discretionary authority to vote with respect to such adjournment or postponement.

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What vote is required to elect directors in Proposal 1?

        Directors will be elected by a plurality of the votes cast in the election of directors by the class or group of stockholders entitled to vote in the election of such directors which are present in person or represented by proxy at the meeting.

        Accordingly, if a quorum exists, the persons receiving a plurality of the votes cast by shareholders entitled to vote with respect to the election of such directors will be elected to serve as a director. Withheld votes and broker non-votes with respect to the election of such directors will not be counted as votes cast for purposes of determining if a director has received a plurality of the votes.

What vote is required with respect to Proposal 2?

        The holders of Common Shares, Preferred Shares and Series A Common Shares will vote together as a single group with respect to Proposal 2. Each holder of outstanding Common Shares or Preferred Shares is entitled to one vote for each Common Share or Preferred Share held in such holder's name. Each holder of Series A Common Shares is entitled to ten votes for each Series A Common Share held in such holder's name.

        If a quorum is present at the annual meeting, the approval of Proposal 2 will require the affirmative vote of the holders of stock having a majority of the votes which could be cast by the holders of all stock entitled to vote on such question which are present in person or by proxy at the meeting. Abstentions by shares entitled to vote on such proposal will be treated as votes which could be cast that are present for such purposes and, accordingly, will effectively count as a vote cast against such proposal. Broker non-votes with respect to such proposal will not be included in the total of votes which could be cast which are present for purposes of determining whether such proposal is approved, even though they may be included for purposes of determining a quorum.

What vote is required with respect to Proposal 3?

        The holders of Common Shares, Preferred Shares and Series A Common Shares will vote together as a single group with respect to Proposal 3. Each holder of outstanding Common Shares or Preferred Shares is entitled to one vote for each Common Share or Preferred Share held in such holder's name. Each holder of Series A Common Shares is entitled to ten votes for each Series A Common Share held in such holder's name.

        If a quorum is present at the annual meeting, the approval of Proposal 3 will require the affirmative vote of the holders of stock having a majority of the votes which could be cast by the holders of all stock entitled to vote on such question which are present in person or by proxy at the meeting. Abstentions by shares entitled to vote on such proposal will be treated as votes which could be cast that are present for such purposes and, accordingly, will effectively count as a vote cast against such proposal. Broker non-votes with respect to such proposal will not be included in the total of votes which could be cast which are present for purposes of determining whether such proposal is approved, even though they may be included for purposes of determining a quorum.

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PROPOSAL 1
ELECTION OF DIRECTORS

        The terms of all incumbent directors will expire at the 2010 annual meeting. The board of directors' nominees for election of directors are identified in the tables below. Each of the nominees has consented to be named in the proxy statement and consented to serve if elected. In the event any such nominee fails to stand for election, the persons named in the proxy presently intend to vote for a substitute nominee if one is designated by the board of directors.

To be Elected by Holders of Common Shares and Special Common Shares

To be Elected by Holders of Series A Common Shares and Preferred Shares

Background of Board of Directors' Nominees

        The following briefly describes the business experience during at least the past five years of each of the nominees, including each person's principal occupation(s) and employment during at least the past five years; the name and principal business of any corporation or other organization in which such occupation(s) and employment were carried on; and whether such corporation or organization is a parent, subsidiary or other affiliate of TDS. The following also indicates any other directorships held, including any other directorships held during at least the past five years, by each nominee in any SEC registered company or any investment company, and the identity of such company.

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        In addition, the following also briefly discusses the specific experience, qualifications, attributes or skills that led to the conclusion that each such person should serve as a director for TDS, in light of TDS' business and structure, including information about the person's particular areas of expertise or other relevant qualifications. As discussed below under "Director Nomination Process", TDS does not have any specific, minimum qualifications that the board believes must be met by a nominee for a position on the TDS board of directors, or any specific qualities or skills that the board believes are necessary for one or more of the TDS directors to possess. The TDS board believes that substantial judgment, diligence and care are required to identify and select qualified persons as directors. The TDS board has consistently sought to nominate to the board of directors eminently qualified individuals whom the board believes would provide substantial benefit and guidance to TDS. Also as discussed below, TDS believes that it is desirable for directors to have diverse backgrounds, experience, skills and other characteristics. In addition, the conclusion of which persons should serve as directors of TDS is based in part on the fact that TDS is a controlled company with a capital structure in which different classes of stock vote for different directorships. In particular, as discussed under "Director Nomination Process", because the TDS Voting Trust has over 90% of the voting power in the election of directors elected by holders of Series A Common Shares and Preferred Shares, nominations of directors for election by the holders of Series A Common Shares and Preferred Shares are based on the recommendation of the trustees of the TDS Voting Trust.

Nominees for Election by Holders of Common Shares and Special Common Shares

        Clarence A. Davis.    Clarence A. Davis initially was nominated to the TDS board of directors pursuant to the Settlement Agreement between GAMCO Asset Management, Inc. and TDS described below. Although TDS initially nominated Mr. Davis to the TDS board of directors in 2009 as part of such settlement, after observing the performance and contributions of Mr. Davis on the TDS board of directors since that time, the TDS board of directors determined to re-nominate Mr. Davis to the TDS board of directors in 2010. The following provides information on the background of Mr. Davis, including the specific factors that led to the conclusion that he should serve as a director of TDS.

        Mr. Davis is currently a business consultant.

        Mr. Davis was previously a director of Nestor, Inc., a software solutions company (formerly NASDAQ: NEST), and was a member and the chairman of Nestor's audit committee. He was the chief executive officer of Nestor from August 2007 until January 2009. Within the last ten years, Nestor successfully petitioned the Rhode Island Superior Court for a court-appointed receiver who assumed all aspects of the company's operations in June 2009. The receiver sold the assets of Nestor to American Traffic Solutions in September 2009. Mr. Davis ceased to be a director of Nestor at that time.

        From May 2006 to August 2007, Mr. Davis was an independent consultant, and from September 2005 through May 2006, he served as consultant to the National Headquarters, American Red Cross.

        Prior thereto, Mr. Davis was employed by the American Institute of Certified Public Accountants ("AICPA"), serving as chief financial officer from 1998 through 2000 and chief operating officer from 2000 through 2005. Mr. Davis was an accountant at the public accounting firm of Spicer & Oppenheim and a predecessor public accounting firm between 1967 and 1990, and was a partner at such firm between 1979 and 1990. Mr. Davis is a Certified Public Accountant (inactive). Mr. Davis has a Bachelor of Science degree in Accounting from Long Island University.

        Mr. Davis is, and has been since 2007, a member of the board of directors and board of trustees of The Gabelli SRI Fund and The Gabelli Global Deal Fund, respectively, which are registered investment companies that are managed by an affiliate of GAMCO Asset Management, Inc. Mr. Davis is a member of the audit committee of each of such funds.

        In addition, since 2009, Mr. Davis has been a director of Pennichuck Corp. (Nasdaq: PNNW), a water utility company in New Hampshire, and Sonesta International Hotels (Nasdaq: SNSTA), a company that operates hotels. Mr. Davis is a member of the audit committee of each of such companies.

        Between 2005 and 2006, Mr. Davis was a director of Oneida Ltd., a privately-held company which designs and distributes stainless steel and silverplated flatware.

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        Mr. Davis brings to the TDS board of directors substantial experience, expertise and qualifications as a director and former chief executive officer of a public technology company, as a chief financial officer and chief operating officer of the AICPA and as a director or trustee of investment funds. In addition, he has substantial experience, expertise and qualifications in accounting as a result of having been a chief financial officer of the AICPA and a Certified Public Accountant in a public accounting firm for many years, and as a result of being or having been a member of five audit committees. Further, his background and attributes bring diversity to the board.

        Christopher D. O'Leary.    Christopher D. O'Leary has been a director of TDS since 2006 and was initially nominated as a director based on a search conducted by TDS' executive search firm. He is also a member of the TDS Compensation Committee. The following provides information on the background of Mr. O'Leary, including the specific factors that led to the conclusion that he should serve as a director of TDS.

        In June 2006, Christopher D. O'Leary was appointed executive vice president, chief operating officer—international of General Mills, Inc. (NYSE: GIS), which manufactures and markets branded consumer foods on a worldwide basis. In this capacity, he oversees over 14,000 employees in over 100 countries. Before that, he was a senior vice president of General Mills since 1999. In addition, he was the president of the General Mills Meals division between 2001 and 2006 and was president of the Betty Crocker division between 1999 and 2001. Mr. O'Leary joined General Mills in 1997.

        Prior to his employment with General Mills, Mr. O'Leary was employed for 17 years with PepsiCo (NYSE: PEP), which manufactures, markets, and sells various snacks, beverages and foods on a worldwide basis. His assignments included leadership roles for the Walkers-Smiths business in the United Kingdom and the Hostess Frito-Lay business in Canada.

        Mr. O'Leary has an MBA from New York University.

        Mr. O'Leary brings to the TDS board of directors substantial experience, expertise and qualifications in retail and marketing as a result of over 30 years experience in retail and marketing. In addition, Mr. O'Leary has over 15 years of significant and high-level experience in management of large retail businesses with a large number of employees, including businesses outside the U.S. Because of the retail nature of the TDS businesses, the TDS board of directors believes that it is highly desirable to have a director with significant knowledge and experience in retail and marketing, as well as significant, high-level experience in managing retail businesses.

        Gary L. Sugarman.    Gary L. Sugarman initially was nominated to the TDS board of directors pursuant to the Settlement Agreement between GAMCO Asset Management, Inc. and TDS described below. Although TDS initially nominated Mr. Sugarman to the TDS board of directors in 2009 as part of such settlement, after observing the performance and contributions of Mr. Sugarman on the TDS board of directors since that time, the TDS board of directors determined to re-nominate Mr. Sugarman to the TDS board of directors in 2010. The following provides information on the background of Mr. Sugarman, including the specific factors that led to the conclusion that he should serve as a director of TDS.

        Mr. Sugarman has been executive chairman of Veroxity Technology Partners, a privately held facilities-based fiber network provider, since December 2007.

        Mr. Sugarman is also principal of Richfield Associates, Inc., a privately-held telecom investment/merchant banking firm he founded in 1994.

        Mr. Sugarman was on the board of directors of PrairieWave Communications, Inc., a privately-held over-builder providing telecommunications and cable television service in South Dakota, Iowa and Minnesota, from 2003 until it was sold in 2007.

        Prior to that, he served as chairman and chief executive officer of Mid-Maine Communications, a privately-held facilities-based telecom company, from the time he co-founded the company in 1994 until it was sold in 2006.

        Prior thereto, Mr. Sugarman held various operating positions at Rochester Telephone Company (now known as Frontier Corporation (NYSE: FTR)), a public telecommunications company, from 1984 to 1991,

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including as Director of Business Development, in which capacity he was involved in many acquisitions and other development activities in the telecommunications industry.

        Mr. Sugarman is currently a director of LICT Corporation, a telecommunications company that is quoted on the Pink Sheets. (Mario J. Gabelli, who is the chairman of and may be deemed to control LICT Corporation, controls GAMCO Asset Management, Inc. See "Settlement Agreement" below.)

        Mr. Sugarman has an MBA from the University at Buffalo—State University of New York.

        Mr. Sugarman brings to the TDS board of directors substantial experience, expertise and qualifications in the telecommunications industry as a result of his current positions at Veroxity and LICT and his many years of prior experience with other companies in the telecommunications industry. Mr. Sugarman also has management experience as executive chairman of Veroxity and as chairman and chief executive officer of Mid-Maine Communications, a company that he co-founded, has been a director of business development of a public telecommunications company and has substantial experience in acquisitions and development activities in the telecommunications industry.

        Herbert S. Wander.    Herbert S. Wander has been on the TDS board of directors since the time that TDS was founded in 1968. He is also a member of the TDS Audit Committee and a member and chairperson of the TDS Compensation Committee. The following provides information on the background of Mr. Wander, including the specific factors that led to the conclusion that he should serve as a director of TDS.

        Herbert S. Wander has been a partner of the law firm of Katten Muchin Rosenman LLP for more than 30 years. He has been a lawyer for over 40 years, concentrating on all aspects of business law, including corporate governance. Katten Muchin Rosenman LLP does not provide legal services to TDS or its subsidiaries.

        In 2004, Mr. Wander was appointed by the Chairman of the Securities and Exchange Commission ("SEC") to Chair the SEC Advisory Committee on smaller public companies, which committee delivered its final report to the SEC in 2006.

        Mr. Wander is Chair of the Corporate Laws Committee of the American Bar Association's Business Law Section and former Chair of the Business Law Section. Mr. Wander is a frequent lecturer on topics of corporate governance.

        He served two terms as a member of the Legal Advisory Committee to the NYSE Board of Governors and is a member of the Legal Advisory Committee to the National Association of Securities Dealers, Inc.

        In addition, Mr. Wander has significant experience with the telecommunications industry and TDS as a director of TDS for over 40 years, as a member of the TDS Audit Committee for over 15 years and as a member of the TDS Compensation Committee for over 5 years.

        Mr. Wander has also previously served as a director of Advance Ross Corporation (formerly Nasdaq: AROS), the primary business of which was operating a value-added tax (VAT) refund service in Europe.

        Mr. Wander has a law degree from Yale Law School.

        Mr. Wander brings to the TDS board of directors substantial experience, expertise and qualifications, with a national reputation as a corporate lawyer and as a corporate governance expert. He also brings to the board substantial experience, expertise and qualifications with TDS and the telecommunications industry as a result of his many years as a director of TDS and as a member of the TDS Audit Committee and the TDS Compensation Committee.

        The board of directors recommends a vote "FOR" each of the above nominees for election by the holders of Common Shares and Special Common Shares.

Nominees for Election by Holders of Series A Common Shares and Preferred Shares

        LeRoy T. Carlson, Jr.    LeRoy T. Carlson, Jr. has been a director of TDS since the time that TDS was founded. He is also a member of the TDS Corporate Governance and Nominating Committee. The

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following provides information on the background of Mr. Carlson, including the specific factors that led to the conclusion that he should serve as a director of TDS.

        LeRoy T. Carlson, Jr. is TDS' President and Chief Executive Officer (an executive officer of TDS). He has been TDS' President since 1981 and its Chief Executive Officer since 1986.

        LeRoy T. Carlson, Jr. has been a director of United States Cellular Corporation (NYSE: USM), a subsidiary of TDS which operates and invests in wireless telephone companies and properties ("U.S. Cellular"), since 1984, and has been its Chairman (an executive officer) since 1989. He has also been a director of TDS Telecommunications Corporation, a wholly owned subsidiary of TDS which operates local telephone companies ("TDS Telecom"), and its Chairman (an executive officer) for over 20 years.

        Mr. Carlson was previously a director of former TDS subsidiaries Aerial Communications, Inc. (formerly Nasdaq: AERL), which developed and operated wireless personal communications services, and American Paging, Inc. (formerly AMEX: APP), which operated wireless paging services.

        Mr. Carlson has an MBA from Harvard University.

        Mr. Carlson is one of the four largest beneficial owners of TDS Series A Common Shares and also beneficially owns a significant number of TDS Special Common Shares.

        Mr. Carlson brings to the TDS board of directors substantial experience, expertise and qualifications with respect to TDS and the telecommunications industry as a result of his many years as a director and President and Chief Executive Officer of TDS, and as a director and Chairman of its two principal business units. As the senior executive officer of TDS and each of its business units, the board of directors considers it essential that Mr. Carlson serve on the TDS board to provide the board with his views on strategy and operations of TDS and its business units. In addition, as a shareholder with a significant economic stake in TDS, Mr. Carlson provides to the TDS board of directors the perspective of shareholders in managing and operating TDS in the best long-term interests of shareholders.

        LeRoy T. Carlson, Jr. is the son of LeRoy T. Carlson and the brother of Walter C.D. Carlson, Letitia G. Carlson, M.D. and Prudence E. Carlson.

        Letitia G. Carlson, M.D.    Letitia G. Carlson, M.D. has been a director of TDS for 13 years. The following provides information on the background of Dr. Carlson, including the specific factors that led to the conclusion that she should serve as a director of TDS.

        Dr. Carlson has been a physician at George Washington University Medical Center for twenty years.

        At such medical center, she was a primary care fellow between 1990 and 1992, an assistant professor between 1992 and 2001 and an assistant clinical professor between 2001 and 2003, and has been an associate clinical professor since 2003.

        Dr. Carlson has an M.D. from Harvard Medical School.

        Dr. Carlson is one of the four largest beneficial owners of TDS Series A Common Shares and also beneficially owns a significant number of TDS Special Common Shares.

        Dr. Carlson brings to the TDS board of directors substantial experience, expertise and qualifications with respect to TDS and the telecommunications industry as a result of her 13 years as a director of TDS. Further, her background and attributes bring diversity to the board. In addition, as a shareholder with a significant economic stake in TDS, Dr. Carlson provides to the TDS board of directors the perspective of shareholders in managing and operating TDS in the best long-term interests of shareholders.

        Dr. Carlson is the daughter of LeRoy T. Carlson and the sister of LeRoy T. Carlson, Jr., Walter C.D. Carlson and Prudence E. Carlson.

        Prudence E. Carlson.    Prudence E. Carlson has been a director of TDS since 2008 and was initially elected as a director based on the recommendation of the trustees of the TDS Voting Trust, which holds over 90% of the Series A Common Shares. The following provides information on the background of Ms. Carlson, including the specific factors that led to the conclusion that she should serve as a director of TDS.

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        Ms. Carlson has a Bachelor of Arts degree from Harvard University.

        Ms. Carlson has been a private investor for more than five years. Ms. Carlson is one of the four largest beneficial owners of TDS Series A Common Shares and also beneficially owns a significant number of TDS Special Common Shares.

        Ms. Carlson is the daughter of LeRoy T. Carlson and the sister of LeRoy T. Carlson, Jr., Walter C.D. Carlson and Letitia G. Carlson, M.D. and is a trustee of the TDS Voting Trust. Ms. Carlson was elected to the TDS board of directors in 2008 to fill the vacancy created on the board of directors by the decision of LeRoy T. Carlson not to stand for election in 2008. As a director elected by the holders of Series A Common Shares and Preferred Shares, the decision to nominate Ms. Carlson was based primarily on the recommendation of the trustees of the TDS Voting Trust.

        Ms. Carlson brings to the TDS board of directors experience with respect to TDS and the telecommunications industry as a result of her background as an investor in TDS for many years, as a trustee of the TDS Voting Trust, and as a director of TDS, and brings diversity of background and attributes to the board. In addition, as a shareholder with a significant economic stake in TDS, Ms. Carlson provides to the TDS board of directors the perspective of shareholders in managing and operating TDS in the best long-term interests of shareholders.

        Walter C.D. Carlson.    Walter C.D. Carlson has been a director of TDS for almost 30 years. He is also a member and chairperson of the TDS Corporate Governance and Nominating Committee. The following provides information on the background of Mr. Carlson, including the specific factors that led to the conclusion that he should serve as a director of TDS.

        Mr. Carlson was elected non-executive Chairman of the Board of TDS in 2002.

        Mr. Carlson has been a partner of the law firm of Sidley Austin LLP for more than 20 years and is a member of its executive committee. Mr. Carlson is an experienced litigator, and has represented various clients in a variety of types of specialized and general commercial litigation. Mr. Carlson is the head of the Financial and Securities Litigation group in the Chicago office of Sidley Austin LLP. The law firm of Sidley Austin LLP provides legal services to TDS and its subsidiaries on a regular basis. See "Certain Relationships and Related Transactions" below. Walter C.D. Carlson does not provide legal services to TDS, U.S. Cellular or their subsidiaries.

        Mr. Carlson has been a director of U.S. Cellular (NYSE: USM) since 1989.

        Mr. Carlson was previously a director of former TDS subsidiary Aerial Communications, Inc. (formerly Nasdaq: AERL).

        Mr. Carlson has a J.D. from Harvard University.

        Mr. Carlson is one of the four largest beneficial owners of TDS Series A Common Shares and also beneficially owns a significant number of TDS Special Common Shares.

        Mr. Carlson brings to the TDS board of directors substantial experience, expertise and qualifications with respect to TDS and the telecommunications industry as a result of his many years as a director of TDS and U.S. Cellular and as Chairman of the Board of TDS, and as a result of having represented many corporate clients. In addition, as a shareholder with a significant economic stake in TDS, Mr. Carlson provides to the TDS board of directors the perspective of shareholders in managing and operating TDS in the best long-term interests of shareholders.

        Walter C.D. Carlson is the son of LeRoy T. Carlson and the brother of LeRoy T. Carlson, Jr., Letitia G. Carlson, M.D. and Prudence E. Carlson.

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        Kenneth R. Meyers.    Kenneth R. Meyers was appointed a director of TDS on January 1, 2007. The following provides information on the background of Mr. Meyers, including the specific factors that led to the conclusion that he should serve as a director of TDS.

        Mr. Meyers was appointed as a director of TDS in connection with his appointment as Executive Vice President and Chief Financial Officer of TDS (an executive officer of TDS), and Chief Accounting Officer (an executive officer) of U.S. Cellular and of TDS Telecom, on January 1, 2007.

        Prior to that time, he was the Executive Vice President—Finance, Chief Financial Officer and Treasurer of U.S. Cellular since 1999. Prior to that, Mr. Meyers was Senior Vice President-Finance (Chief Financial Officer) and Treasurer of U.S. Cellular from 1997 to 1999 and was the Vice President-Finance (Chief Financial Officer) and Treasurer of U.S. Cellular for more than five years prior to 1997. Mr. Meyers had been employed by U.S. Cellular in accounting and financial capacities since 1987.

        Mr. Meyers has also been a director of U.S. Cellular since 1999 and a director of TDS Telecom since 2007.

        Mr. Meyers is a Certified Public Accountant (inactive) and has an MBA from Northwestern University's J. L. Kellogg Graduate School of Management.

        Mr. Meyers brings to the TDS board of directors substantial experience, expertise and qualifications with respect to TDS and the telecommunications industry as a result of his background as a director and Executive Vice President and Chief Financial Officer of TDS since 2007, and his many years as a director and Executive Vice President—Finance, Treasurer and Chief Financial Officer and in other positions at U.S. Cellular. He also brings substantial experience, expertise and qualifications in management, finance and accounting as a result of such background.

        Donald C. Nebergall.    Donald C. Nebergall has been a director of TDS for over 30 years. He is also a member of the TDS Audit Committee. The following provides information on the background of Mr. Nebergall, including the specific factors that led to the conclusion that he should serve as a director of TDS.

        Mr. Nebergall has been a consultant to companies since 1988, including TDS from 1988 to 2002.

        Mr. Nebergall was vice president of The Chapman Company, a privately-held registered investment advisory company located in Cedar Rapids, Iowa, from 1986 to 1988.

        Prior to that, he was the chairman of Brenton Bank & Trust Company, Cedar Rapids, Iowa, from 1982 to 1986, and was its president from 1972 to 1982.

        Mr. Nebergall also is or has been a board member of several private, civic and charitable organizations.

        Mr. Nebergall has a Bachelor of Science degree from Iowa State University.

        Mr. Nebergall brings to the TDS board of directors substantial experience, expertise and qualifications with respect to TDS and the telecommunications industry as a result of his many years as a director of TDS and his prior background as a consultant to TDS. He also brings experience and knowledge as a result of his background in investment advisory services and banking and as a result of his board service for several organizations.

        George W. Off.    George W. Off has been a director of TDS since 1997 and was initially nominated as a director based on a search conducted by TDS' executive search firm. He is also a member of the TDS Compensation Committee and a member and chairperson of the TDS Audit Committee. The following provides information on the background of Mr. Off, including the specific factors that led to the conclusion that he should serve as a director of TDS.

        Before he retired, Mr. Off was a director of Checkpoint Systems, Inc (NYSE: CKP) from 2002 to 2009, and was its chairman between 2002 and 2008. He was also the chief executive officer of Checkpoint Systems, Inc. between 2002 and 2007. Checkpoint Systems is a multinational manufacturer and marketer of integrated system solutions for retail security, labeling and merchandising.

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        Prior to that, Mr. Off was chairman of the board of directors of Catalina Marketing Corporation, a provider of in-store electronic marketing services, which at the time was a NYSE listed company (formerly NYSE: POS), from 1998 until 2000. Mr. Off served as president and chief executive officer of Catalina from 1994 to 1998.

        In addition, Mr. Off has significant experience with the telecommunications industry as a director of TDS since 1997. Mr. Off also has been a member of the TDS Audit Committee for over 10 years and a member of the TDS Compensation Committee for over 5 years.

        Mr. Off has a Bachelor of Science degree from the Colorado School of Mines.

        Mr. Off brings to the TDS board of directors significant experience, expertise and qualifications in marketing and management as a result of his prior positions as a director and as chief executive officer and chairman of Checkpoint Systems and of Catalina Marketing. Because of the retail nature of the TDS businesses, the TDS board of directors believes that it is highly desirable to have directors with significant knowledge and experience in retail and marketing, as well as significant, high-level experience in managing retail businesses. In addition, Mr. Off has significant experience with respect to TDS and the telecommunications industry as a result of his many years as a director of TDS and as a member of the TDS Audit Committee and the TDS Compensation Committee.

        Mitchell H. Saranow.    Mitchell H. Saranow has been a director of TDS since 2004 and has served as an "audit committee financial expert" on TDS' Audit Committee since that time. He is also a member of the TDS Corporate Governance and Nominating Committee. The following provides information on the background of Mr. Saranow, including the specific factors that led to the conclusion that he should serve as a director of TDS.

        Mr. Saranow is Chairman of The Saranow Group, L.L.C., a family-owned investment company he founded in 1984, through which Mr. Saranow founded or co-founded, developed and sold several successful ventures.

        Mr. Saranow was Chairman of the Board and co-Chief Executive Officer of Navigant Consulting, Inc. (NYSE: NCI), which provides consulting services to various industries on an international level, from November 1999 to June 2000.

        Prior thereto, he was Chairman and Managing General Partner of Fluid Management, L.P. for more than five years. Fluid Management was a privately-held specialized machinery manufacturer which was the world leader in designing, manufacturing and distributing dispensing and mixing equipment for the paint, coatings, ink, personal care and polymeric industries.

        Within the last ten years, Mr. Saranow served as Chief Executive officer of two related privately-held Dutch companies which were sold under Dutch insolvency laws in 2008.

        Earlier in his career, he was Chief Financial Officer of two large privately-held food manufacturers, an investment banker specializing in financing the CATV industry, and an attorney with Mayer, Brown and Platt in Chicago, Illinois. Mr. Saranow is a Certified Public Accountant (inactive).

        Mr. Saranow was formerly a director of Lawson Products, Inc. (Nasdaq: LAWS), which distributes industrial maintenance and repair supplies, Navigant Consulting, Inc. (NYSE: NCI), which provides consulting services to various industries in North America, Europe and Asia, North American Scientific, Inc. (Nasdaq: NASM), which designs, develops, manufactures, and sells radioisotopic products for the treatment of cancer, and Telular Corp. (Nasdaq: WRLS), which designs, develops, manufactures and markets fixed cellular products. At Lawson Products, Mr. Saranow was a member and chairman of the nominating and corporate governance committee and the financial strategies committee and was a member of the audit committee and the compensation committee. Mr. Saranow also was a member of the audit committee of Navigant Consulting, a member and an "audit committee financial expert" of the audit committee of North American Scientific and a member and chairman of the audit committee of Telular Corp.

        Mr. Saranow has a JD/MBA degree from Harvard University.

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        Mr. Saranow brings to the TDS board of directors a broad amount of experience, expertise and qualifications as a result of his extensive background. Mr. Saranow is a Certified Public Accountant (inactive) and has been an accountant, lawyer, investment banker and a chief financial officer, chief executive officer and/or chairman at multiple companies. Mr. Saranow has founded or co-founded, developed and sold several successful ventures. He has significant experience with public companies and their boards of directors, having been a director of five public companies, including TDS. He has been a member of the audit committees of all five of such companies and was designated an audit committee financial expert by two of such companies, including TDS. In addition, Mr. Saranow brings to the board of directors experience and qualifications with respect to TDS and the telecommunications industry as a result of his service as a director of TDS and as its audit committee financial expert for over five years.

        The board of directors recommends a vote "FOR" each of the above nominees for election by the holders of Series A Common Shares and Preferred Shares.

Former Directors

        The following additional information is provided in connection with the election of directors.

        The following persons were directors whose terms expired at the 2009 annual meeting. Due to the Settlement Agreement between GAMCO Asset Management, Inc. and TDS described below, James Barr III and Gregory P. Josefowicz did not stand for reelection at the 2009 annual meeting and, accordingly, ceased to be directors of TDS when their terms expired at the 2009 annual meeting. However, TDS voted to add Mr. Barr and Mr. Josefowicz as directors of U.S. Cellular at the 2009 annual meeting of U.S. Cellular.

        James Barr III.    James Barr III served as a non-independent member of the TDS board of directors from 1990 to 2009. He had been President and Chief Executive Officer of TDS Telecom from 1990 until his retirement in 2007. Mr. Barr stepped down as President and CEO of TDS Telecom on January 1, 2007. He remained on TDS Telecom's payroll until March 23, 2007 and retired on March 24, 2007. After that time, Mr. Barr continued to serve as a consultant to TDS until March 23, 2009. For further information, see "Director Compensation" below.

        Gregory P. Josefowicz.    Mr. Josefowicz served as an independent member of the TDS board of directors from 2007 to 2009. He served as a non-exclusive, senior level consultant to Borders Group, Inc., between July 2006 and February 2008. From 1999 until his retirement in July 2006, Mr. Josefowicz served as a director and president and chief executive officer, and was named chairman of the board in 2002, of Borders Group. Prior to that time, he was chief executive officer of the Jewel-Osco division of American Stores Company, from 1997 until June 1999 when American Stores merged into Albertson's Inc., at which time, Mr. Josefowicz became president of Albertson's Midwest region.

Settlement Agreement

        On February 17-20, 2009, GAMCO Asset Management, Inc. ("GAMCO") delivered notices to TDS of its intention to nominate four persons, including Clarence A. Davis and Gary L. Sugarman, as directors for election by the holders of Common Shares and Special Common Shares at the 2009 annual meeting. GAMCO is a large shareholder of TDS. See "Security Ownership of Certain Beneficial Owners and Management" below.

        On April 27, 2009, TDS entered into a Settlement Agreement with GAMCO dated as of April 24, 2009 (the "Settlement Agreement"). Pursuant to the Settlement Agreement, the TDS board of directors nominated Clarence A. Davis and Gary L. Sugarman for election as directors by the holders of Common Shares and Special Common Shares at the 2009 annual meeting. Pursuant to the Settlement Agreement, GAMCO withdrew its notices to TDS of its intention to nominate four persons as directors and did not nominate persons for election at the 2009 annual meeting.

        The Settlement Agreement also provided that, if the TDS board of directors nominates Clarence A. Davis and Gary L. Sugarman (including any replacement thereof identified pursuant to the Settlement

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Agreement) for election as directors at TDS' 2010 Annual Meeting, GAMCO (a) will vote all TDS shares that it is entitled to vote at the 2010 Annual Meeting in favor of the election of each of the persons nominated by the board of directors for election as directors by the holders of Common Shares and Special Common Shares at the 2010 Annual Meeting, and (b) will not (i) provide a notice to TDS that it intends to nominate or nominate persons for election as directors at the 2010 Annual Meeting, (ii) take any action, including as part of any group, to solicit proxies or votes for any persons other than the TDS nominees or (iii) advise, assist, encourage or seek to persuade any other person to take any of the foregoing action.

        On December 18, 2009, TDS announced that its board of directors has determined to nominate Clarence A. Davis and Gary L. Sugarman for election by the holders of Common Shares and Special Common Shares at TDS' 2010 annual meeting of shareholders. As a result, pursuant to the foregoing provisions of the Settlement Agreement, GAMCO will be required to vote for and support the candidates nominated by the TDS board of directors for election by the holders of Common Shares and Special Common Shares at TDS' 2010 annual meeting of shareholders, including Clarence A. Davis and Gary L. Sugarman.

        The Settlement Agreement was filed with the SEC as an exhibit to TDS' Current Report on Form 8-K dated April 24, 2009.

CORPORATE GOVERNANCE

Board of Directors

        The business and affairs of TDS are managed by or under the direction of the board of directors. The board of directors consists of twelve members. Holders of Common Shares and Special Common Shares elect 25% of the directors rounded up plus one director, or a total of four directors based on a board size of twelve directors. Holders of Series A Common Shares and Preferred Shares elect the remaining eight directors. The TDS Voting Trust has approximately 94.5% of the voting power in the election of such eight directors and approximately 53.5% of the voting power in all other matters.

Board Leadership Structure

        Under the leadership structure selected for TDS, the same person does not serve as both the Chief Executive Officer and Chairman of the Board. Walter C.D. Carlson, who is not an employee or officer of TDS, serves as the non-executive Chairman of the Board and presides over meetings of the full board of directors. LeRoy T. Carlson, Jr., who is an officer and employee of TDS, serves as President and Chief Executive Officer and is responsible for day-to-day leadership and performance of TDS. This leadership structure is set forth in TDS' Bylaws. TDS has determined that this leadership structure is appropriate given the specific characteristics and circumstances of TDS. In particular, TDS considers it appropriate that the person who is the President and Chief Executive Officer of TDS also not serve as the Chairman of the Board in order to separate the executive who is primarily responsible for the performance of the company from the person who presides over board meetings at which performance of TDS is evaluated.

Board Role in Risk Oversight

        The following discloses the extent of the board of directors' role in the risk oversight of TDS, including how the board administers its oversight function, and the effect that this has on the board's leadership structure discussed above.

        The TDS board of directors is primarily responsible for oversight of risk assessment and risk management of TDS. Although the TDS board of directors can delegate this responsibility to board committees, the TDS board has not done so, and continues to have full responsibility relating to risk oversight. Although the TDS board of directors has oversight responsibilities, the actual risk assessment and risk management is carried out by the President and Chief Executive Officer and other officers of TDS and reported to the board.

        TDS has established an Enterprise Risk Management (ERM) program, which applies to TDS and all of its business units. This program was designed with the assistance of an outside consultant and was

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integrated into TDS' existing management and strategic planning processes. The ERM program provides a common enterprise-wide language and discipline around risk identification, quantification and mitigation. The TDS board of directors currently receives periodic updates about the status and progress of this ERM program and takes action to the extent appropriate based on such updates.

        Although the TDS board of directors has ultimate oversight authority over risk and has not delegated such responsibility to any committees, certain TDS committees also have certain responsibilities relating to risk.

        Under NYSE listing standards, and as set forth in its charter, the Audit Committee is required to "discuss policies with respect to risk assessment and risk management." NYSE listing standards further provide that, "while it is the job of the CEO and senior management to assess and manage the listed company's exposure to risk, the audit committee must discuss guidelines and policies to govern the process by which this is handled. The audit committee should discuss the listed company's major financial risk exposures and the steps management has taken to monitor and control such exposures. The audit committee is not required to be the sole body responsible for risk assessment and management, but, as stated above, the committee must discuss guidelines and policies to govern the process by which risk assessment and management is undertaken."

        Accordingly, pursuant to the foregoing requirements, the Audit Committee discusses TDS' major financial risk exposures and the steps management has taken to monitor and control such exposures in connection with its review of financial statements and related matters on a quarterly basis.

        In addition, as part of the ERM program, the Audit Committee discusses guidelines and policies to govern the process by which risk assessment and risk management are handled. The Audit Committee currently receives updates and discusses policies with respect to risk assessment and risk management on a regular basis. The Audit Committee is not solely responsible for ERM, but the committee discusses guidelines and policies to govern the process by which ERM is undertaken.

        In addition, in connection with the functions of the Compensation Committee relating to the compensation of the executive officers of TDS (other than executive officers of U.S. Cellular), the Compensation Committee considers risks relating to compensation of executive officers of TDS, as discussed below in the Compensation Discussion and Analysis. In addition, the Compensation Committee has responsibilities under its charter with respect to long-term compensation for all employees, as discussed below under "Risks from Compensation Policies and Practices."

        Also, the TDS Corporate Governance and Nominating Committee may consider certain risks in connection with its responsibilities relating to corporate governance and director nominations, as described below.

        TDS believes that the leadership structure described above facilitates risk oversight because the role of the Chief Executive Officer, who has primary operating responsibility to assess and manage TDS' exposure to risk, is separated from the role of the Chairman of the Board, who sets the agenda for and presides over board of directors' meetings at which the TDS board exercises its oversight responsibility with respect to risk.

Director Independence and New York Stock Exchange Listing Standards

        TDS Common Shares and Special Common Shares are listed on the NYSE. Accordingly, TDS is subject to the listing standards applicable to companies that have equity securities listed on the NYSE.

        Under listing standards of the NYSE, TDS is a "controlled company" as such term is defined by the NYSE. TDS is a controlled company because over 50% of the voting power for the election of directors of TDS is held by the trustees of the TDS Voting Trust (i.e., the TDS Voting Trust has the voting power to elect eight of the twelve directors, or 66.7% of the directors). Accordingly, it is exempt from certain listing standards that require listed companies that are not controlled companies to (i) have a board composed of a majority of directors that qualify as independent under the rules of the NYSE, (ii) have a compensation committee composed entirely of directors that qualify as independent under the rules of

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the NYSE, and (iii) have a nominating/corporate governance committee composed entirely of directors that qualify as independent under the rules of the NYSE.

        As a controlled company, TDS is required to have at least three directors who qualify as independent to serve on the Audit Committee. The TDS Audit Committee has four members: George W. Off (chairperson), Donald C. Nebergall, Mitchell H. Saranow and Herbert S. Wander. Such directors must qualify as independent under the NYSE Listed Company Manual, including Section 303A.02(a) and Section 303A.02(b), and Section 303A.06, which incorporates the independence requirements of Section 10A-3 of the Securities Exchange Act of 1934, as amended ("Section 10A-3"). Except as required by listing standards or SEC rule, TDS does not have any categorical standards of independence that must be satisfied.

        Pursuant to the requirements of the NYSE Listed Company Manual, the TDS board of directors affirmatively determined that each member of the TDS Audit Committee has no material relationship with TDS or any other member of the TDS consolidated group ("TDS Consolidated Group"), either directly or as a partner, shareholder or officer of an organization that has a relationship with any member of the TDS Consolidated Group, and that each of such persons is independent (pursuant to Section 303A.02(a), Section 303A.02(b) and Section 10A-3) considering all relevant facts and circumstances, including commercial, industrial, banking, consulting, legal, accounting, charitable and familial relationships, if any.

        Such relevant facts and circumstances included the following: None of such persons is an employee or officer of TDS or any other member of the TDS Consolidated Group. None of such persons has any direct or indirect business relationships and/or fee arrangements with the TDS Consolidated Group and none of such persons receives any compensation from the TDS Consolidated Group except for his services as a director and member of board committees of TDS. None of such persons has any other relationship or arrangement with the TDS Consolidated Group other than in his capacity as a director of TDS. Each of such persons qualifies as independent under each of the categorical standards in Section 303A.02(b) of the NYSE Listed Company Manual. Each of such persons qualifies as independent under Section 10A-3 because none of such persons receives any compensatory fee from any member of the TDS Consolidated Group and is not an "affiliated person" (as defined by the SEC) with respect to any member of the TDS Consolidated Group. None of such persons is an "immediate family member" (as defined by Section 303A.02(b)) of any person who is not independent under Section 303A.02 of the NYSE Listed Company Manual. The only relationship and/or fee arrangement which such persons have with the TDS Consolidated Group are as directors and members of board committees of TDS. See also "Security Ownership of Certain Beneficial Owners And Management" below for information relating to beneficial share ownership and other relationships of Donald C. Nebergall.

        In addition, incumbent directors Clarence A. Davis, Christopher D. O'Leary and Gary L. Sugarman would qualify as independent directors under the listing standards of the NYSE. As a result, seven of the twelve incumbent directors, or over 58% of the directors, have been determined to qualify or would qualify as independent under the listing standards of the NYSE.

Meetings of Board of Directors

        The board of directors held 15 meetings during 2009. Each director attended at least 75 percent of the total number of meetings of the board of directors (held during 2009 at which time such person was a director) and at least 75 percent of the total number of meetings held by each committee of the board on which such person served (during the periods that such person served).

Corporate Governance Guidelines

        Under NYSE listing standards, TDS is required to adopt and disclose corporate governance guidelines that address certain specified matters. TDS has adopted Corporate Governance Guidelines that address (i) board of directors structure, (ii) director qualification standards, (iii) director responsibilities, orientation and continuing education, (iv) director compensation and stock ownership, (v) board resources and access to management and independent advisors, (vi) annual performance evaluation of the Board, (vii) board committees, (viii) management succession and (ix) periodic review of

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the guidelines. A copy of such guidelines is available on TDS' web site, www.teldta.com, under Corporate Governance—Corporate Governance Guidelines.

Corporate Governance and Nominating Committee

        Because TDS is a controlled company, it is not required under NYSE listing standards to have a corporate governance/nominating committee or, if it has one, that the corporate governance/nominating committee be composed entirely of independent directors. Although not required to do so under NYSE listing standards, TDS voluntarily has established a Corporate Governance and Nominating Committee. The members of the Corporate Governance and Nominating Committee are Walter C.D. Carlson (chairperson), LeRoy T. Carlson, Jr. and Mitchell H. Saranow. Mr. Saranow qualifies as an independent director under NYSE listing standards. The primary function of the Corporate Governance and Nominating Committee is to advise the board on corporate governance matters, including developing and recommending to the board the corporate governance guidelines for TDS. In addition, the charter of the committee provides that the committee will develop selection objectives and oversee the search for qualified individuals to serve on the board of directors and recommend to the board prospective nominees and the re-nomination of incumbent directors as it deems appropriate. A copy of the committee charter is available on TDS' web site, www.teldta.com, under Corporate Governance—Board Committee Charters. The Corporate Governance and Nominating Committee met three times in 2009.

Audit Committee

        The primary function of the Audit Committee is to (a) assist the board of directors of TDS in its oversight of (1) the integrity of TDS' financial statements, (2) TDS' compliance with legal and regulatory requirements, (3) the independent auditor's qualifications and independence, and (4) the performance of TDS' internal audit function and independent auditors; (b) prepare an audit committee report as required by the rules of the SEC to be included in TDS' annual proxy statement and (c) perform such other functions as set forth in the TDS Audit Committee charter, which shall be deemed to include the duties and responsibilities set forth in Section 10A-3. A copy of the Audit Committee charter is available on TDS' web site, www.teldta.com, under Corporate Governance—Board Committee Charters.

        The Audit Committee is currently composed of four members who qualify as independent under NYSE listing standards, including Section 10A-3, as discussed above. The current members of the Audit Committee are George W. Off (chairperson), Donald C. Nebergall, Mitchell H. Saranow and Herbert S. Wander. The board of directors has determined that each of the members of the Audit Committee is financially literate and has "accounting or related financial management expertise" pursuant to listing standards of the NYSE.

        The board has made a determination that Mr. Saranow is an "audit committee financial expert" as such term is defined by the SEC.

        In accordance with the SEC's safe harbor rule for "audit committee financial experts," no member designated as an audit committee financial expert shall (i) be deemed an "expert" for any other purpose or (ii) have any duty, obligation or liability that is greater than the duties, obligations and liability imposed on a member of the board or the audit committee not so designated. Additionally, the designation of a member or members as an "audit committee financial expert" shall in no way affect the duties, obligations or liability of any member of the audit committee, or the board, not so designated.

        The Audit Committee held nine meetings during 2009.

Pre-Approval Procedures

        The Audit Committee adopted a policy in 2003, as last amended in May 2009, pursuant to which all audit and non-audit services must be pre-approved by the Audit Committee. The following describes the policy as amended. Under no circumstances may TDS' principal independent registered public accounting firm provide services that are prohibited by the Sarbanes Oxley Act of 2002 or rules issued thereunder. Non-prohibited audit related services and certain tax and other services may be provided to TDS, subject to such pre-approval process and prohibitions. The Audit Committee has delegated to the

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chairperson plus any other member of the Audit Committee the authority to pre-approve services by the principal independent registered public accountant firm. In the event the chairperson is unavailable, pre-approval may be given by any two members of the Audit Committee. In addition to pre-approval of specific services, specified services have been pre-approved in detail up to specified dollar limits pursuant to the policy. All services are required to be reported to the full Audit Committee at each of its regularly scheduled meetings. The pre-approval policy relates to all services provided by TDS' principal independent registered public accounting firm.

Review, Approval or Ratification of Transactions with Related Persons

        The Audit Committee Charter provides that the Audit Committee has responsibilities with respect to related party transactions, as such term is defined by the rules of the NYSE. Related party transactions are addressed in Section 314.00 of the NYSE Listed Company Manual.

        Section 314.00 of the NYSE Listed Company Manual states that "Related party transactions normally include transactions between officers, directors, and principal shareholders and the company." In general, "related party transactions" would include transactions required to be disclosed in TDS' proxy statement pursuant to Item 404 of Regulation S-K of the SEC. Pursuant to Item 404, TDS is required to disclose any transaction, which includes any financial transaction, arrangement, or relationship (including any indebtedness or guarantee of indebtedness) or a series of transactions, that has taken place since the beginning of TDS' last fiscal year or any currently proposed transaction in which: (1) TDS was or is to be a participant, (2) the amount involved exceeds $120,000 and (3) any "related person" had or will have a direct or indirect material interest in the transaction during any part of the fiscal year. For this purpose, in general, the term "related person" includes any director or executive officer of TDS, any nominee for director, any beneficial owner of more than five percent of any class of TDS' voting securities and any "immediate family member" of such persons, within the meaning of Item 404.

        Section 314.00 of the NYSE Listed Company Manual provides that "Each related party transaction is to be reviewed and evaluated by an appropriate group within the listed company involved. While the Exchange does not specify who should review related party transactions, the Exchange believes that the Audit Committee or another comparable body might be considered as an appropriate forum for this task. Following the review, the company should determine whether or not a particular relationship serves the best interest of the company and its shareholders and whether the relationship should be continued or eliminated."

        Accordingly, pursuant to such provisions, the TDS Audit Committee has responsibilities over transactions that are deemed to be related-party transactions under Section 314.00 of the NYSE Listed Company Manual. Other than the foregoing provisions, TDS has no policy relating to (i) the types of transactions that are covered by such policies and procedures; (ii) the standards to be applied pursuant to such policies and procedures; or (iii) the persons or groups of persons on the board of directors or otherwise who are responsible for applying such policies and procedures, and TDS does not maintain any other written document evidencing such policies and procedures.

        See Executive and Director Compensation—Compensation Committee Interlocks and Insider Participation—Certain Relationships and Related Transactions for discussion of any related party transactions since the beginning of the last fiscal year.

Compensation Committee

        Although not required to do so under NYSE listing standards because it is a controlled company, TDS voluntarily has established a Compensation Committee comprised solely of directors that qualify as independent under the rules of the NYSE. The primary functions of the Compensation Committee are to discharge the board of director's responsibilities relating to the compensation of the executive officers of TDS, other than executive officers of U.S. Cellular or any of its subsidiaries. The responsibilities of the Compensation Committee include the review of salary, bonus, long-term compensation and all other elements of compensation of such executive officers.

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        For these purposes, "executive officers" means all officers that are employees who are or will be identified in TDS' annual proxy statement as "executive officers," including the President and CEO of TDS Telecom, except that the compensation of the President and CEO of U.S. Cellular is established and administered by U.S. Cellular's chairman and long-term incentive compensation committee, as described in the proxy statement of U.S. Cellular relating to its 2010 annual meeting of shareholders.

        The Compensation Committee is comprised of at least two non-employee members of TDS' board of directors, each of whom is an "outside director" within the meaning of section 162(m) of the Internal Revenue Code of 1986, as amended, and a "Non-Employee Director" within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended. As noted above, such members also qualify as independent under the rules of the NYSE. During 2009, the members of the Compensation Committee included Herbert S. Wander (chairperson), George W. Off, Christopher D. O'Leary and Gregory P. Josefowicz until May 2009 when Mr. Josefowicz ceased to be a TDS director as discussed above. These persons do not have any compensation committee interlocks and are not related to any other directors.

        The Compensation Committee charter permits it to delegate some or all of the administration of the long-term incentive plans or programs to the President and Chief Executive Officer or other executive officers of TDS as the committee deems appropriate, to the extent permitted by law and the applicable long-term incentive plan or program, but not regarding any award to the President and CEO. However, the Compensation Committee has not delegated any of its authority with respect to any of the officers identified in the below Summary Compensation Table.

        The Compensation Committee's charter provides that it will obtain advice and assistance from the Chief Executive Officer and the Vice President of Human Resources and from any other officer or employee of TDS, as it determines is appropriate. TDS' Human Resources Department also supports the Compensation Committee in its work. As discussed below, the Compensation Committee also utilizes the services of compensation consultants. See the Compensation Discussion and Analysis below for information about compensation consultants, which information is incorporated by reference herein.

        The Compensation Committee does not approve director compensation. It is the view of the TDS board of directors that this should be the responsibility of the full board of directors. Only non-employee directors receive compensation in their capacity as directors and, as a result, the view of the TDS board of directors is that all directors should participate in such compensation decisions, rather than only some or all of the non-employee directors.

        A copy of the charter of the Compensation Committee is available on TDS' web site, www.teldta.com, under Corporate Governance—Board Committee Charters.

        The Compensation Committee held five meetings during 2009. It also took actions by unanimous written consent.

Other Committee

        TDS has a Pricing Committee, consisting of LeRoy T. Carlson, Jr., as Chairman, and Kenneth R. Meyers, as a regular member. Walter C.D. Carlson is an alternate member of this committee. The Pricing Committee does not have a charter. Pursuant to resolutions of the TDS board of directors from time to time, the Pricing Committee is authorized to take certain actions with respect to financing and capital transactions of TDS, such as the issuance, redemption or repurchase of debt or the repurchase of shares of capital stock of TDS.

Director Nomination Process

        As discussed above, because TDS is a controlled company, it is not required under NYSE listing standards to have a corporate governance/nominating committee or, if it has one, that it be composed entirely of independent directors. Although not required to do so under NYSE listing standards, TDS voluntarily has established a Corporate Governance and Nominating Committee. The charter of the committee provides that the committee will develop selection objectives and oversee the search for qualified individuals to serve on the board of directors and recommend to the board of directors prospective nominees and the re-nomination of incumbent directors as it deems appropriate. The

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committee does not nominate directors. It only recommends to the board of directors prospective nominees and the re-nomination of incumbent directors as it deems appropriate. The entire board of directors determines whether to nominate prospective nominees and re-nominate incumbent directors.

        TDS does not have a formal policy with regard to the consideration of any director candidates recommended by shareholders. However, because the TDS Voting Trust has over 90% of the voting power in the election of directors elected by holders of Series A Common Shares and Preferred Shares, nominations of directors for election by the holders of Series A Common Shares and Preferred Shares is based on the recommendation of the trustees of the TDS Voting Trust. With respect to candidates for director to be elected by the holders of Common Shares and Special Common Shares, the Corporate Governance and Nominating Committee and/or the TDS board may from time to time informally consider candidates submitted by shareholders that hold a significant number of Common Shares and/or Special Common Shares. Although TDS has no formal procedures to be followed by shareholders in submitting recommendations of candidates for director, shareholders that desire to nominate directors must follow the procedures set forth in TDS' Bylaws.

        TDS does not have any specific, minimum qualifications that the board believes must be met by a nominee for a position on the TDS board of directors, or any specific qualities or skills that the board believes are necessary for one or more of the TDS directors to possess. The TDS board believes that substantial judgment, diligence and care are required to identify and select qualified persons as directors and does not believe that it would be appropriate to place limitations on its own discretion. The TDS board has consistently sought to nominate to the board of directors eminently qualified individuals whom the board believes would provide substantial benefit and guidance to TDS.

        The TDS Corporate Governance and Nominating Committee does not have a policy with regard to the consideration of diversity in identifying director nominees. However, as reflected in its Code of Business Conduct, TDS values diversity and does not discriminate on the basis of gender, age, race, color, sexual orientation, religion, ancestry, national origin, marital status, disability, military or veteran status or citizenship status. In considering whether to nominate individuals as director candidates, the Corporate Governance and Nominating Committee takes into account all facts and circumstances, including diversity. For this purpose, diversity broadly means a variety of backgrounds, experience, skills, education, attributes, perspectives and other differentiating characteristics. TDS believes that it is desirable for a board to have directors that can bring the benefit of diverse backgrounds, experience, skills and other characteristics to permit the board to have a variety of views and insights. Accordingly, the Corporate Governance and Nominating Committee considers how director candidates can contribute to board diversity as one of the many factors it considers in identifying nominees for director.

        Section 1.15 of the TDS bylaws provides that a person properly nominated by a shareholder for election as a TDS director shall not be eligible for election as a director unless he or she signs and returns to the Secretary of TDS, within fifteen days of a request therefor, written responses to any questions posed by the Secretary, that are intended to (i) determine whether such person may qualify as independent and would qualify to serve as a director of TDS under rules of the Federal Communications Commission ("FCC"), and (ii) obtain information that would be disclosed in a proxy statement with respect to such person as a nominee for election as a director and other material information about such person.

        Whether or not the Corporate Governance and Nominating Committee will recommend that the TDS board re-nominate, and the TDS board will re-nominate, existing directors for re-election depends on all facts and circumstances, including views on how the director has performed and is performing his or her duties. In the event of a vacancy on the board of a director elected by the Series A Common Shares and Preferred Shares, nominations are based on the recommendation of the trustees of the TDS Voting Trust. In the event of a vacancy on the board of a director elected by the Common Shares and Special Common Shares, TDS may use various sources to identify potential candidates, including an executive search firm. In addition, the Corporate Governance and Nominating Committee may consider recommendations by shareholders that hold a significant number of Common Shares and/or Special Common Shares. Potential candidates are initially screened by the Corporate Governance and Nominating Committee and by other persons as the Corporate Governance and Nominating Committee

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designates. Following this process, the Corporate Governance and Nominating Committee will consider whether one or more candidates should be considered by the full board of directors. When appropriate, information about the candidate is presented to and discussed by the full board of directors.

        All of the nominees approved by the TDS board for inclusion on TDS' proxy card for election at the 2010 annual meeting are executive officers and/or directors who are standing for re-election and were recommended for re-nomination by the Corporate Governance and Nominating Committee. Clarence A. Davis and Gary L. Sugarman were nominated to the TDS board of directors pursuant to the Settlement Agreement described above.

        From time to time, TDS may pay a fee to an executive search firm to identify potential candidates for election as directors. TDS did not pay a fee in 2009 or 2010 to any third party or parties to identify or evaluate or assist in identifying or evaluating potential new nominees for election as directors at the 2010 annual meeting.

Non-Management Directors and Shareholder Communication with Directors

        As required by NYSE listing standards, the non-management directors of TDS meet at regularly scheduled executive sessions without management. The TDS Chairman of the Board, Walter C.D. Carlson, a non-management director, presides at all meetings of the non-management directors. In addition, as required by NYSE listing standards, the independent directors of TDS meet at least once per year in an executive session without management or directors who are not independent.

        Shareholders or other interested parties may send communications to the TDS board of directors, to the Chairman of the Board, to the non-management directors or to specified individual directors of TDS at any time. Shareholders or other interested parties should direct their communication to such persons or group in care of the Secretary of TDS at its corporate headquarters, 30 N. LaSalle St., Suite 4000, Chicago IL 60602. Any shareholder communications that are addressed to the board of directors, the Chairman of the Board, the non-management directors or specified individual directors will be delivered by the Secretary of TDS to such persons or group.

        For more information, see the instructions on TDS' web site, www.teldta.com, under Corporate Governance—Contacting the TDS Board of Directors.

TDS Policy on Attendance of Directors at Annual Meeting of Shareholders

        All directors are invited and encouraged to attend the annual meeting of shareholders, which is normally followed by the annual meeting of the board of directors. In general, all directors attend the annual meeting of shareholders unless they are unable to do so due to unavoidable commitments or intervening events. All persons serving as directors at the time attended the 2009 annual meeting of shareholders.

Stock Ownership Guidelines

        On May 10, 2007, the TDS board of directors amended its stock ownership guidelines for directors to provide that, within three years after (a) March 31, 2007 or (b) the date on which a director first becomes a director, whichever is later, and thereafter for so long as each director remains a director of TDS, each such director is required to own Series A Common Shares, Common Shares and/or Special Common Shares of TDS having a combined value of at least $100,000. The TDS board of directors will review this minimum ownership requirement periodically. The stock ownership guidelines are included in TDS' Corporate Governance Guidelines, which have been posted to TDS' web site, www.teldta.com, under Corporate Governance—Corporate Governance Guidelines.

Code of Business Conduct and Ethics Applicable to Directors

        As required by Section 303A.10 of the NYSE Listed Company Manual, TDS has adopted a Code of Business Conduct and Ethics for Officers and Directors, as amended as of September 15, 2008. This code has been posted to TDS' internet website, www.teldta.com, under Corporate Governance—Code of Business Conduct and Ethics for Officers and Directors.

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PROPOSAL 2
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

        We anticipate continuing the services of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the current fiscal year. Representatives of PricewaterhouseCoopers LLP, who served as our independent registered public accounting firm for the last fiscal year, are expected to be present at the annual meeting of shareholders and will have the opportunity to make a statement and to respond to appropriate questions raised by shareholders at the annual meeting or submitted in writing prior thereto.

        We are not required to obtain shareholder ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm by the Bylaws or otherwise. However, we have elected to seek such ratification by the affirmative vote of the holders of a majority of the votes which could be cast by shares entitled to vote with respect to such matter at the annual meeting. Should the shareholders fail to ratify the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm, the Audit Committee of the board of directors will review whether to retain such firm for the year ending December 31, 2010.

        The board of directors recommends a vote "FOR" ratification of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the current fiscal year.

FEES PAID TO PRINCIPAL ACCOUNTANTS

        The following sets forth the aggregate fees (including expenses) billed by TDS' principal accountants PricewaterhouseCoopers LLP for 2009 and 2008:

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(1)

Represents the aggregate fees billed by PricewaterhouseCoopers LLP for 2009 and 2008 (as updated from amounts reported in the 2009 proxy statement) for professional services rendered for the audit of the annual financial statements for the years 2009 and 2008 included in TDS' and U.S. Cellular's Forms 10-K for those years and the reviews of the financial statements included in TDS' and U.S. Cellular's Forms 10-Q for each of these years including the attestation and report relating to internal control over financial reporting as well as accounting research, review of financial information included in other SEC filings and the issuance of consents and comfort letters.

(2)

Represents fees for a review of state and franchise tax returns.

(3)

Represents the aggregate fees billed by PricewaterhouseCoopers LLP for services, other than services covered in (1) and (2) above, for the years 2009 and 2008.

        See "Corporate Governance—Audit Committee—Pre-Approval Procedures" above for a description of the Audit Committee's pre-approval policies and procedures.

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AUDIT COMMITTEE REPORT

        This report is submitted by the current members of the Audit Committee of the board of directors of TDS. The Audit Committee operates under a written charter adopted by the TDS board of directors, a copy of which is available on TDS' web site, www.teldta.com, under Corporate Governance—Board Committee Charters.

        Management is responsible for TDS' internal controls and the financial reporting process. TDS has an internal audit staff, which performs testing of internal controls and the financial reporting process. The independent registered public accounting firm is responsible for performing an independent audit of TDS' consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) and issuing a report thereon. The Audit Committee's responsibility is to monitor and oversee these processes.

        In this context, the Audit Committee held meetings with management, the internal audit staff and representatives of PricewaterhouseCoopers LLP, TDS' independent registered public accounting firm for 2009. In these meetings, the Audit Committee reviewed and discussed the audited financial statements as of and for the year ended December 31, 2009. Management represented to the Audit Committee that TDS' consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America, and the Audit Committee has reviewed and discussed the consolidated financial statements with management and representatives of PricewaterhouseCoopers LLP.

        The discussions with PricewaterhouseCoopers LLP also included the matters required to be discussed by Statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1. AU Section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T, relating to information regarding the scope and results of the audit. The Audit Committee also received from PricewaterhouseCoopers LLP written disclosures and a letter regarding its independence as required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant's communications with the audit committee concerning independence, and this information was discussed with PricewaterhouseCoopers LLP.

        Based on, and in reliance upon these reviews and discussions, the Audit Committee recommended to the board of directors that the audited financial statements as of and for the year ended December 31, 2009 be included in TDS' Annual Report on Form 10-K for the year ended December 31, 2009.

        By the members of the Audit Committee of the board of directors of TDS:

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EXECUTIVE OFFICERS

        The following executive officers of TDS were identified in the above tables regarding the election of directors: LeRoy T. Carlson, Jr., President of TDS; and Kenneth R. Meyers, Executive Vice President and Chief Financial Officer of TDS. In addition to the executive officers identified in the tables regarding the election of directors, set forth below is a table identifying current officers of TDS and its subsidiaries who are executive officers of TDS under SEC rules. Unless otherwise indicated, the position held is an office of TDS. The age of the following persons is as of the date of this proxy statement.

        LeRoy T. Carlson.    LeRoy T. Carlson has been Chairman Emeritus of TDS (an executive officer of TDS) for more than five years. He is a director of U.S. Cellular and is a director emeritus of TDS. Mr. Carlson is the father of LeRoy T. Carlson, Jr., Walter C.D. Carlson, Letitia G. Carlson, M.D. and Prudence E. Carlson.

        John E. Rooney.    John E. Rooney has been the President and Chief Executive Officer and a director of U.S. Cellular for more than five years. On February 24, 2010, U.S. Cellular announced that John E. Rooney will retire from U.S. Cellular in 2010. A nationally recognized executive recruiting firm is conducting a search for his replacement.

        David A. Wittwer.    David A. Wittwer has been the President and Chief Executive Officer of TDS Telecom since January 1, 2007. On February 21, 2006, TDS appointed Mr. Wittwer as Executive Vice President and Chief Operating Officer (COO) of TDS Telecom and designated him to succeed James Barr III as President and CEO of TDS Telecom on January 1, 2007. Prior to his appointment as Executive Vice President and COO of TDS Telecom, Mr. Wittwer was President of TDS Telecom's incumbent local exchange carrier operations since March 2005. Prior to that time, he was Executive Vice President—Staff Operations, Chief Financial Officer, Treasurer and Assistant Secretary of TDS Telecom for more than five years.

        Douglas D. Shuma.    Douglas D. Shuma was appointed Senior Vice President and Corporate Controller of TDS on September 1, 2007. Prior to that time, Mr. Shuma was a consultant at Douglas Financial Consultants, a company that he founded, since 2006. Before that time, he was the Vice President and Controller of Baxter International Inc. for more than five years. Mr. Shuma is a Certified Public Accountant (inactive).

        Kurt B. Thaus.    Kurt B. Thaus was appointed Senior Vice President and Chief Information Officer on January 12, 2004. Prior to that time, he was employed by T-Systems North America, Inc., the North American subsidiary of T-Systems International (Deutsche Telekom) for more than five years, most recently as senior vice president of technology management services.

        Scott H. Williamson.    Scott H. Williamson has been Senior Vice President—Acquisitions and Corporate Development of TDS for more than five years.

        C. Theodore Herbert.    C. Theodore Herbert has been Vice President—Human Resources of TDS for more than five years.

        Joseph R. Hanley.    Joseph R. Hanley was appointed Vice President—Technology Planning and Services on August 15, 2004. Prior to that time, he was employed by TDS Telecom for more than five years, most recently as Vice President—Strategic Planning and Emerging Applications.

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        All of our executive officers devote all their employment time to the affairs of TDS and its subsidiaries.

Codes of Business Conduct and Ethics Applicable to Officers

        As required by Section 303A.10 of the NYSE Listed Company Manual, TDS has adopted a Code of Business Conduct and Ethics for Officers and Directors, that also complies with the definition of a "code of ethics" as set forth in Item 406 of Regulation S-K of the SEC. The foregoing code has been posted to TDS' internet website, www.teldta.com, under Corporate Governance—Code of Business Conduct and Ethics for Officers and Directors.

        In addition, TDS has adopted a broad Code of Business Conduct that is applicable to all officers and employees of TDS and its subsidiaries. The foregoing code has been posted to TDS' internet website, www.teldta.com, under Corporate Governance—TDS Code of Business Conduct.

        TDS intends to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding any amendment to any of the foregoing codes, by posting such information to TDS' internet website. Any waivers of any of the foregoing codes for directors or executive officers will be approved by TDS' board of directors or authorized committee thereof, as applicable, and disclosed in a Form 8-K that is filed with the SEC within four business days of such waiver.

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EXECUTIVE AND DIRECTOR COMPENSATION

        The following discussion and analysis of our compensation practices and related compensation information should be read in conjunction with the Summary Compensation Table and other tables included below, as well as our financial statements and management's discussion and analysis of financial condition and results of operations included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2009. The following discussion includes statements of judgment and forward-looking statements that involve risks and uncertainties. These forward-looking statements are based on our current expectations, estimates and projections about our industry, our business, compensation, management's beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "potential," "continue," "ongoing," similar expressions, and variations or negatives of these words and include, but are not limited to, statements regarding projected performance and compensation. Actual results could differ significantly from those projected in the forward-looking statements as a result of certain factors, including, but not limited to, the risk factors discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2009. We assume no obligation to update the forward-looking statements.

Compensation Discussion And Analysis

        This Compensation Discussion and Analysis discusses the compensation awarded to, earned by, or paid to the executive officers identified in the Summary Compensation Table.

Overview

        TDS' compensation policies for executive officers are intended to provide incentives for the achievement of corporate and individual performance goals and to provide compensation consistent with the financial performance of TDS. TDS' policies establish incentive compensation performance goals for executive officers based on factors over which such officers have control and which are important to TDS' long-term success. TDS believes compensation should be related to the financial performance of TDS and should be sufficient to enable TDS to attract and retain individuals possessing the talents required for long-term successful performance. Nevertheless, although performance influences compensation and awards, all elements of compensation are discretionary and officers do not become entitled to any compensation or awards solely as a result of the achievement of performance levels.

        The responsibilities of the TDS Compensation Committee include the review of salary, bonus, long-term compensation and all other elements of compensation of executive officers of TDS, other than officers of U.S. Cellular or any of its subsidiaries. For these purposes, "executive officers" means all officers that are employees who are or will be identified in TDS' annual proxy statement as "executive officers," including the President and CEO of TDS Telecom, except that the compensation of the President and CEO of U.S. Cellular is established and administered by U.S. Cellular's chairman and long-term incentive compensation committee, as described in the proxy statement of U.S. Cellular relating to its 2010 annual meeting of shareholders. Accordingly, except as expressly indicated below, the following discussion does not apply to John E. Rooney, the President and CEO of U.S. Cellular. Also, Mr. Rooney does not receive any awards with respect to TDS shares; all his awards made by the U.S. Cellular long-term incentive compensation committee are with respect to Common Shares of U.S. Cellular (NYSE: USM).

        The Compensation Committee's charter provides that it will obtain advice and assistance from the Chief Executive Officer and the Vice President of Human Resources and from any other officer or employee of TDS, as it determines is appropriate. As discussed below, the Compensation Committee also utilizes the services of both TDS' compensation consultant and an independent compensation consultant.

        The Compensation Committee's charter permits it to delegate some or all of the administration of the long-term incentive plans or programs to the President and Chief Executive Officer or other executive officer of TDS as the Committee deems appropriate, to the extent permitted by law and the applicable

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long-term incentive plan or program, but not regarding any award to the President and CEO. However, the Compensation Committee has not delegated any of its authority with respect to any of the officers identified in the Summary Compensation Table.

Objectives and Reward Structure of TDS' Compensation Programs

        The above Overview generally described the objectives and reward structure of TDS' compensation programs. This section further discusses, with respect to the officers identified in the Summary Compensation Table, (1) the objectives of TDS' compensation programs and (2) what the compensation programs are designed to reward.

        The objectives of TDS' compensation programs for executive officers, and their relationship to the reward structure, are to:

•

support TDS' overall business strategy and objectives;



•

attract and retain high quality management;



•

link individual compensation with attainment of individual performance goals and with attainment of business unit and TDS objectives; and



•

provide competitive compensation opportunities consistent with the financial performance of TDS.

        The primary financial focus of TDS as a consolidated enterprise is the increase of long-term shareholder value through growth, measured primarily in such terms as return on capital, revenues, customer units in service, operating cash flow (operating income plus depreciation, amortization and accretion) and operating income. Operating units of TDS may have somewhat different primary financial measures. However, there is no strict relationship between elements of compensation or total compensation and such measures of performance. Instead, compensation decisions are made subjectively by the Compensation Committee, considering certain performance measures, as well as all other appropriate facts and circumstances. TDS' compensation policies for executive officers are designed to reward the achievement of such corporate performance goals.

        Each element of compensation and the total compensation of the named executive officers are determined on the basis of the committee's analysis of multiple factors rather than specific measures of performance. The Compensation Committee does not rely on predetermined formulas or a limited set of criteria when it evaluates the performance of the named executive officers.

        TDS' compensation programs are designed to reward performance of TDS on both a short-term and long-term basis. With respect to the officers identified in the Summary Compensation Table, the design of compensation programs and performance rewarded is similar but with some differences for each of the named executive officers depending on such officer's position and responsibilities.

        The Compensation Committee evaluates the performance of the President and CEO of TDS in light of the annual and ongoing objectives for TDS and for its primary business units and the attainment of those objectives, and sets the elements of compensation for the President and CEO based on such performance evaluation and compensation principles, as discussed below.

        With respect to the other officers identified in the Summary Compensation Table, the Compensation Committee reviews management's evaluation of the performance of such executive officers and determines and approves the elements of compensation for such executive officers based on such performance evaluations and compensation principles, as discussed below.

Elements of Compensation

        This section discusses, with respect to the officers identified in the Summary Compensation Table, (i) each element of compensation paid to such officers, (ii) why TDS chooses to pay each element of compensation, (iii) how TDS determines the amount or formula for each element of pay, and (iv) how each compensation element and TDS' decisions regarding that element fit into TDS' overall compensation objectives and affect decisions regarding other elements.

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        Each element of compensation paid to officers is as follows:

•

Annual Cash Compensation



o

Salary



o

Bonus



•

Long-term equity compensation pursuant to Long-Term Incentive Plans



o

Stock Awards



–

Bonus Stock Match Awards



–

Restricted Stock Unit Awards



o

Stock Options



•

Other Benefits and Plans Available to Identified Officers



o

Deferred Compensation



o

Supplemental Executive Retirement Plan ("SERP")



o

Perquisites



•

Other Generally Applicable Benefits and Plans



o

Employee Stock Purchase Plan



o

Tax Deferred Savings Plan



o

Pension Plan



o

Post-Retirement Benefits



o

Health and Welfare Plans

        TDS has chosen to pay or provide these elements of compensation after considering common compensation practices of peers and other companies with similar characteristics, in order to support TDS' overall business strategy and objectives. TDS recognizes that it must compensate its executive officers in a competitive manner comparable to similar companies in order to attract and retain high quality management, attain or exceed business objectives and targeted financial performance and increase shareholder value. Executive compensation is intended to provide, in the judgment of the Compensation Committee, an appropriate balance between the long-term and short-term performance of TDS, and also a balance between TDS' financial performance and shareholder return.

        TDS does not have defined guidelines that determine the amount or formula for each element of pay. TDS also does not have defined guidelines that determine how each compensation element and decisions regarding that element fit into TDS' overall compensation objectives and affect decisions regarding other elements. TDS has no target levels for cash versus equity compensation. Instead, TDS establishes elements of compensation and determines how they fit together overall and in the manner described in the following discussion.

        As noted above, the elements of executive compensation consist of both annual cash and long-term equity compensation. Annual cash compensation consists of base salary and an annual bonus. Annual compensation decisions are based partly on individual and corporate short-term performance and partly on the individual and corporate cumulative long-term performance during the executive's tenure in his or her position, particularly with regard to the President and CEO. Long-term equity compensation is intended to compensate executives primarily for their contributions to long-term increases in shareholder value and is generally provided through the grant of stock options and restricted stock units.

        The Compensation Committee determines annually each executive officer's base salary, taking into consideration: (1) the appropriate salary range for the executive officer's position and responsibilities, (2) his or her performance during the preceding year, (3) his or her performance during the executive's tenure in the position, (4) TDS' and its business units' performance during the year compared to plan

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and compared with that of similar companies, and (5) such other factors and circumstances as the committee may deem relevant. The Compensation Committee makes such determination considering the matters described below, including advice and information from its independent compensation consultant, Compensation Strategies, Inc. See Compensation Consultant below for information about Compensation Strategies.

        In addition, the Compensation Committee determines annually the executive officer's bonus, taking into consideration: (1) the executive officer's performance during the preceding year, including contributions to TDS and its business units, and achievement of individual objectives, (2) TDS' and its business units' performance during the year compared to plan and compared with that of similar companies, (3) the achievement of important corporate and business unit objectives for the year and (4) such other factors and circumstances as the committee may deem relevant.

        Due to a change in the guidelines relating to bonuses effective in 2009, the 2009 rows in the below Summary Compensation Table include both (i) bonus amounts with respect to 2008 performance that were paid in 2009 and (ii) bonus amounts with respect to 2009 performance that were paid in 2010.

        Effective January 1, 2009, TDS amended its guidelines and procedures for awarding bonuses to executive officers. Prior to such amendments, such guidelines provided that bonuses were not earned or vested until the date the bonus was paid. As a result, such bonuses were not reported as earned in the Summary Compensation Table until the year in which such bonuses were paid. Effective for bonuses with respect to 2009 performance, the foregoing guidelines were amended to provide that, to the extent and only to the extent that any bonus is paid for a performance year, such bonus shall be deemed to have been earned on December 31 of that performance year. (Guidelines and procedures for awarding bonuses to John E. Rooney as President and Chief Executive Officer of U.S. Cellular were similarly amended. Information with respect to such changes and John E. Rooney is included in U.S. Cellular's proxy statement relating to its 2010 annual meeting of shareholders.)

        As a result of such amendments, the bonus paid in 2010 relating to performance in 2009 is being reported as earned in 2009 in the Summary Compensation Table. Accordingly, the below Summary Compensation Table in this 2010 proxy statement includes both the bonus relating to 2008 performance that was paid and earned in 2009 pursuant to the prior guidelines and the bonus relating to 2009 performance that was paid in 2010 but deemed to be earned in 2009 pursuant to the amended guidelines. Beginning with 2010 compensation as reported in the 2011 proxy statement, only one year of bonus will be reported going forward. The 2010 compensation reported in the 2011 proxy statement will include only the bonus paid in 2011 relating to 2010 performance.

        In addition to the foregoing change, the below Summary Compensation Table also includes certain changes in the columns in which the bonus is reported, as required by SEC rules as a result of the amendment of the guidelines for certain executive officers. With respect to the bonus relating to performance in 2008 and prior years, because the bonus amount was entirely discretionary and not deemed to be earned unless and until paid, the entire amount of the bonus was reported under the "Bonus" column under SEC rules. However, beginning with the bonus relating to performance in 2009, certain amounts of the bonus are included under column (g), "Non-Equity Incentive Plan Compensation". This is because, under SEC rules, the portion of the bonus that is based on performance is deemed to be non-equity incentive plan compensation, and must be reported under the column captioned "Non-Equity Incentive Plan Compensation." See discussion below under "Company Performance." Accordingly, a portion of the bonus paid in 2010 that is based on 2009 company performance is included in column (g) and the balance of the bonus paid in 2010 relating to 2009 is included in the "Bonus" column, along with 100% of the bonus paid in 2009 relating to 2008 performance under the prior guidelines. The portion of the bonus paid in 2010 based on 2009 performance that is included in the "Non-Equity Incentive Plan Compensation" column is the amount of the bonus calculated based on company performance excluding any positive discretionary adjustment to such bonus and excluding any discretionary bonus based on individual performance. Such bonus amounts that are not included in the "Non-Equity Incentive Plan Compensation" column are included in the "Bonus" column.

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        In general, other facts and circumstances that the Compensation Committee considers in determining the annual cash compensation of the named executive officers and/or that the President and CEO considers in his evaluation and recommendation to the Compensation Committee with respect to the named executive officers, other than the President and CEO, include the following: the fact that TDS is a public company; the publicly-available benchmark information of cash compensation of TDS' publicly-held peers and other publicly-held companies, as discussed below; the fact that TDS is primarily a regional competitor and that some of its competitors are national or global telecommunications companies that are much larger than TDS and possess greater resources than TDS; the fact that TDS is a controlled company; and the fact that the primary financial focus of TDS as a consolidated enterprise is the increase of long-term shareholder value through growth. Additional facts and circumstances considered with respect to the named executive officers are discussed below in the discussion relating to each such officer.

        The Compensation Committee also determines long-term equity compensation awards to the identified executive officers under the TDS 2004 Long-Term Incentive Plan, which include options, restricted stock units and bonus match units, as discussed below. Grants of options, restricted stock units and bonus match units by TDS to the President and CEO and the other executive officers are generally made to all such officers at the same time in a particular year. In 2009, options and restricted stock units were granted on May 21, 2009. Bonus match units were granted on March 6, 2009 (the date that the related bonus was determined). TDS may also make grants of equity awards during other times of the year as it deems appropriate. All option, restricted stock unit and bonus match unit awards are expensed over the applicable vesting periods.

        TDS does not backdate options or have any program, plan or practice to time the grant of awards in coordination with the release of material non-public information.

        The Compensation Committee does not consider an officer's outstanding equity awards or stock ownership levels when determining the value of the long-term incentive award component of such officer's compensation. The Compensation Committee makes long-term incentive awards based on performance for a particular year and other considerations as described herein and does not consider outstanding equity awards and stock ownership to be relevant in connection therewith.

Risks Relating to Compensation to Executive Officers

        TDS does not believe that the incentives in compensation arrangements maintained by TDS encourage executive officers to take unnecessary, excessive or inappropriate risks that could threaten the value of TDS, or that risks arising from TDS' compensation policies and practices for executive officers are reasonably likely to have a material adverse effect on TDS, as explained below. The following matters were considered by the TDS Compensation Committee with respect to risks relating to compensation to TDS' executive officers.

        TDS' compensation policies for executive officers are intended to provide incentives for the achievement of corporate and individual performance goals and to provide compensation consistent with the financial performance of TDS. TDS' policies establish incentive compensation performance goals for executive officers based on factors over which such officers have substantial control and which are important to TDS' long-term success. TDS believes that the elements of compensation are appropriately balanced between short and long-term compensation in a way that does not encourage excessive risk taking. In particular, all executives receive a competitive base salary that is paid regardless of performance and a significant portion of compensation is long-term incentive compensation, which discourages short-term risk taking.

        Although executive officers also receive an annual bonus (including bonus amounts that are reported as Non-Equity Incentive Plan Compensation in the Summary Compensation Table as required under SEC rules—see discussion under "Annual Cash Compensation—Summary of Bonus Payments" below), only part of the annual bonus is based on company performance—the rest is based on individual performance and discretion. Further, even with respect to company performance, TDS does not have incentive plans pursuant to which executive officers become entitled to compensation as a result of the achievement of a certain level of performance regardless of the risk undertaken. All incentive

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compensation is discretionary and, as a result, could be reduced or not awarded if an executive officer caused TDS to undertake unauthorized risk. Further, TDS believes that its controls and monitoring do not provide officers with substantial discretion that would permit them to undertake unauthorized risk.

        Also, long-term equity compensation includes restricted stock units that retain value even if stock prices decline. As a result, as long as the stock continues to have some value, such awards will not expire without value and, as a result, do not encourage risk taking to attempt to avoid having awards expire without value, as could occur with stock options. Although executive officers also receive stock options, multi-year vesting and an exercise period that is generally ten years reduces the potential for excessive risk taking and, in any event, options are only one of several elements of compensation.

        Also, depending on the facts and circumstances, TDS may seek to adjust or recover awards or payments if the relevant performance measures upon which they are based are restated or otherwise adjusted in a manner that would reduce the size of an award or payment.

        As a telecommunications company, TDS faces general business risks similar to many other businesses and certain other risks relating to the telecommunications business (as disclosed in TDS' most recent Annual Report on Form 10-K). TDS has an authorization policy that requires various levels of approvals for executive officers to take action depending on the dollar amount involved, and internal controls, procedures and processes to monitor and review such actions. Under such policy, executive officers have dollar limits with respect to the matters that they can approve on their own. Actions involving amounts over such limits would need to be approved by the board of directors and/or more than one executive officer of TDS.

        Also, as discussed below under "Risks from Compensation Policies and Practices", TDS does not believe that risks arising from TDS' compensation policies and practices for its employees, including non-executive officers, are reasonably likely to have a material adverse effect on TDS.

Compensation Consultant

        Towers Watson (f/k/a Towers Perrin) is TDS management's primary compensation consultant. The Compensation Committee also utilizes the services of this consultant as described below.

        In 2009, the role of such compensation consultant in determining or recommending the amount or form of executive officer compensation was to provide external benchmarking data to TDS from its executive compensation survey database and to provide recommendations on the type and amount of compensation to be granted to officers.

        The nature and scope of the assignment, and the material elements of the instructions or directions given to such consultant with respect to the performance of its duties under its engagement, were to make recommendations based on external benchmarking data obtained from its executive compensation survey database. See "Benchmarking" below.

        In addition, the Compensation Committee's charter provides that the committee shall have the authority to engage advisors as it deems necessary to carry out its duties and that TDS shall provide appropriate funding, as determined by the Compensation Committee, for payment of any advisor retained by the committee, as well as ordinary administrative expenses of the committee that are necessary or appropriate in carrying out its duties. Pursuant to such authority, the Compensation Committee has engaged Compensation Strategies, Inc., a provider of executive compensation consulting services, since 2008. Compensation Strategies is independent and does not have any other relationships with TDS or its affiliates.

        The role of Compensation Strategies in determining or recommending the amount or form of executive officer compensation, the nature and scope of the assignment, and the material elements of the instructions or directions given to such consultant with respect to the performance of its duties under its engagement, are to review TDS' various compensation elements and programs and to provide independent analysis and advice to the Compensation Committee for the purpose of evaluating such elements and programs. As discussed below under "Benchmarking", such compensation consultant

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conducted a competitive review of compensation levels of TDS executive officers in 2009 as a cross-check to the information provided by Towers Watson.

        Other than to provide to the Compensation Committee the foregoing advice or recommendations on the amount or form of executive compensation, neither Compensation Strategies nor its affiliates provided any additional services to TDS or its affiliates or to the Compensation Committee in 2009.

        Neither Towers Watson nor Compensation Strategies provides any advice as to director compensation.

Benchmarking

        TDS engages in benchmarking as described below.

        For executive compensation purposes, market benchmark data was obtained from the Towers Watson Executive Compensation Database. For compensation decisions in 2009, data was obtained from the 2008 database. The database contained over 750 companies that represented a diverse range of companies across all industries, including companies from the telecommunications, retail, financial, electronics, pharmaceutical, manufacturing and consumer products sectors. The data was developed using regression analysis based on annual revenues approximating TDS' revenues. When regression data was not available, tabular data from the database was used, and approximately scoped to reflect TDS revenues. This database was used to benchmark the ranges of annual cash compensation considered to be appropriate for the named executive officers, as discussed below. This database also was used to benchmark the equity compensation awards of named executive officers, as discussed below. TDS believes this approach is a reasonably accurate reflection of the competitive market for such elements of compensation necessary to retain current executives and attract future executives to positions at TDS. In addition, TDS believes this methodology is more statistically valid than solely benchmarking these elements of compensation to the limited number of companies in the peer group used for the Stock Performance Graph for the applicable performance year.

        The identities of the individual component companies that are included in the Towers Watson database are neither disclosed to nor considered by TDS or the Compensation Committee. TDS and the Compensation Committee rely upon and consider to be material only the aggregated survey data prepared by Towers Watson. They do not obtain or consider information on the identities of the individual companies included in the survey in connection with any compensation decisions because this information is not considered to be material and because they rely on the services of Towers Watson for such purposes.

        In 2009, the Compensation Committee also obtained peer group information from its independent compensation consultant, Compensation Strategies. In particular, in 2009, Compensation Strategies provided market data for a peer group for purposes of a competitive review of compensation levels of TDS' executive officers. This was done as a cross-check against the compensation that was approved based on the above information provided by Towers Watson.

        For this cross-check, Compensation Strategies created an industry peer group that consisted of 17 publicly-traded companies of similar size to TDS from the telecommunications industry. The 2008 annual revenues of this group ranged from approximately $902 million to $13.8 billion (with a median and average of approximately $2.2 billion and $3.0 billion, respectively). The market capitalization ranged from $9 million to $6.2 billion (with a median and average of approximately $1.2 billion and $2.1 billion, respectively). The companies in this group were: Centennial Communications, CenturyTel, Cincinnati Bell, Embarq, Frontier Communications (f/k/a Citizens Communications), Global Crossing, IDT Corp., Leap Wireless International, Level 3 Communications, MetroPCS Communications, NII Holdings, Primus Telecommunication Group, Qwest Communications International, tw telecom (f/k/a Time Warner Telecom), Virgin Mobile USA, Windstream, and XO Holdings.

        TDS also generally considers the companies in the peer group index included in the "Stock Performance Graph" that is included in the TDS annual report to shareholders, as discussed below, as well as other companies in the telecommunications industry and other industries, to the extent considered appropriate, based on similar size, function, geography or otherwise. This information is used

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to generally understand the market for compensation arrangements for executives, but is not used for benchmarking purposes.

        TDS selected the Dow Jones U.S. Telecommunications Index, a published industry index, as its peer group for the Stock Performance Graph. As of December 31, 2008, the Dow Jones U.S. Telecommunications Index was composed of the following companies: AT&T, CenturyTel, Cincinnati Bell, Embarq, Frontier Communications, Leap Wireless International, Leucadia National, Level 3 Communications, MetroPCS Communications, NII Holdings, Qwest Communications International, RCN Corp., Sprint Nextel, Telephone and Data Systems (TDS and TDS.S), tw telecom (Class A), U.S. Cellular, Verizon Communications, Virgin Media and Windstream. As of December 31, 2009, this index no longer includes Embarq Corp. or RCN Corp. due to removal by Dow Jones as a result of acquisition or otherwise.

Company Performance

        Each year, TDS calculates an overall percentage of TDS performance based on the performance of U.S. Cellular and TDS Telecom. Due to the change in the bonus guidelines discussed above, the following shows TDS' level of achievement with respect to both 2008 and 2009.

2009 Performance

        Overall TDS performance for 2009 was 72.7% of target. This represents the average of the adjusted U.S. Cellular percentage of 72.0% and the TDS Telecom percentage of 74.8%, as weighted by a specified percentage intended to represent the approximate proportion of TDS that U.S. Cellular and TDS Telecom represent, calculated as follows:

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*

No adjustment was made to 2009 performance for TDS Telecom.

        Performance of U.S. Cellular is discussed in the U.S. Cellular proxy statement. As noted therein, the overall average percentage achieved with respect to 2009 performance for purposes of the U.S. Cellular bonus pool was calculated to be 62.5%. Nevertheless, the entire amount of the bonus pool is discretionary and subject to approval by the Chairman of U.S. Cellular. Pursuant to this discretionary authority, the Chairman adjusted the overall bonus pool to 72.0% of target. This was done due to the solid financial and operating results of U.S. Cellular in 2009 despite the continuing weak economy and a continuing challenging and competitive industry and due to other achievements by U.S. Cellular in 2009 that were not measured by the U.S. Cellular executive bonus plan, and to adjust for certain changes in facts and circumstances that were not anticipated when the targets were established.

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        The following provides information on performance metrics and achievement of TDS Telecom with respect to 2009 that was considered in evaluating the bonus paid in 2010. Financial information presented in the below table is based on the performance metrics established specifically for bonus purposes and may not agree with the segment financial information for TDS Telecom reported in TDS' 2009 Form 10-K, which is based on GAAP, or with other publicly disclosed information. This table shows that the overall percentage achievement of the performance metrics was 74.8% with respect to 2009 for TDS Telecom. A discretionary adjustment to this percentage was not made with respect to 2009.

        If a metric does not meet the minimum threshold performance level, no target points are awarded with respect to such metric. If maximum performance or greater is achieved, 200% of the target points are awarded. As shown above, the minimum threshold was achieved with respect to all except one of the metrics, but was less than maximum performance in each case. As a result, the target points were prorated based on the formula included in the TDS Telecom bonus plan.

        A total of 748 actual versus 1,000 target points was achieved and, as a result, the overall percentage achieved was 74.8%.

2008 Performance

        Overall TDS performance for 2008 was 66.25% of target. This represents the average of the adjusted U.S. Cellular percentage of 55% and the adjusted TDS Telecom percentage of 100%, as weighted by a

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specified percentage intended to represent the approximate proportion of TDS that U.S. Cellular and TDS Telecom represent, calculated as follows:

        Performance of U.S. Cellular is discussed in the U.S. Cellular proxy statement. As noted therein, the overall average percentage achieved with respect to 2008 performance for purposes of the U.S. Cellular bonus pool was calculated to be 39%. Nevertheless, pursuant to his discretionary authority, the Chairman adjusted the overall bonus pool to 55% of target. In general, this was done due to the unexpected deterioration of the economic and competitive environment in 2008 after the targets were set in 2007, due to the solid financial and operating results of U.S. Cellular in 2008 despite a weak economy and an increasingly challenging and competitive industry, and due to other achievements by U.S. Cellular in 2008 that are not measured by the U.S. Cellular executive bonus plan.

        The following provides information on performance metrics and achievement of TDS Telecom with respect to 2008 that was considered in evaluating the bonus paid in 2009. Financial information presented in the below table is based on the performance metrics established specifically for bonus purposes and may not agree with the segment financial information for TDS Telecom reported in TDS' 2009 Form 10-K, which is based on GAAP, or with other publicly disclosed information. This table shows that the overall percentage achievement of the performance metrics was 99.9% with respect to 2008 for TDS Telecom. This percentage was rounded to 100% on a discretionary basis by the Chairman of TDS Telecom, who is also the President and CEO of TDS.

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        If a metric does not meet the minimum threshold performance level, no target points are awarded with respect to such metric. If maximum performance or greater is achieved, 200% of the target points are awarded. As shown above, the minimum threshold was achieved with respect to each of the metrics, but was less than maximum performance in each case. As a result, the target points were prorated based on the formula included in the TDS Telecom bonus plan.

        A total of 999 actual versus 1000 target points was achieved and, as a result, the overall percentage achieved was 99.9%, but this was rounded to 100% on a discretionary basis as discussed above.

Personal Objectives and Performance

        In addition to TDS and/or business unit performance, the Compensation Committee may consider personal objectives and performance. The personal objectives and performance that the Compensation Committee considered in its evaluation of the President and CEO are discussed below. The personal objectives and performance that the President and CEO considered in his evaluation to the Compensation Committee of the named executive officers other than himself are also discussed below. There was no minimum level of achievement of any of those objectives that was required for any cash compensation decision. The assessment of the achievement of such objectives is not formulaic, objective or quantifiable. Instead, the individual performance considerations are factors, among others, that are taken into account in the course of making subjective judgments in connection with compensation decisions.

Annual Cash Compensation

        Annual cash compensation decisions, consisting of base salary for the current year and bonus based on performance, are generally made concurrently by the Compensation Committee each year for each of the identified executive officers. As discussed above, due to a change in the guidelines relating to bonuses effective in 2009, the 2009 rows in the below Summary Compensation Table include both (i) bonus amounts with respect to 2008 performance that were paid in 2009 and (ii) bonus amounts with respect to 2009 performance that were paid in 2010. Accordingly, the following discusses both such bonus amounts.

        As part of the process of determining the appropriate elements of annual cash compensation for the named executive officers, the Compensation Committee is provided with information about the compensation of similar executive officers at other companies, including chief executive officers of companies, chief executive officers and chief operating officers of their principal business units, if available, chief financial officers and other officers with responsibilities comparable to the foregoing TDS officers, as reported in proxy statements and salary surveys. The Compensation Committee also considers recommendations from the President and CEO regarding compensation for the named executives other than the President and CEO, each of which reports directly to him. The Vice President—Human Resources prepares for the committee an analysis of compensation paid to similar executive officers of other comparable companies. See "Benchmarking" above.

        Annually, the nature and extent of each executive officer's personal accomplishments and contributions for the year are determined, based on information submitted by the executive and by others familiar with his or her performance, including the President and CEO in the case of the named executive officers other than the President and CEO. The Compensation Committee evaluates the information in terms of the personal objectives established for such executive officer for the performance appraisal period.

        The Compensation Committee also makes an assessment of how well TDS did as a whole during the year, as discussed above, and the extent to which the President and CEO believes the executive officer other than the President and CEO contributed to the results, as discussed below. With respect to executive officers having primary responsibility over a certain business unit or division of TDS, the Compensation Committee considers the performance of the business unit or division and the contribution of the executive officer thereto.

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        The Compensation Committee uses these sources and makes the determination of appropriate elements of compensation and ranges for such elements for such identified executive officers based on its informed judgment, using the information provided to it by the Vice President of Human Resources, including information from Towers Watson. The Compensation Committee also obtained information from its independent compensation consultant, Compensation Strategies. The elements of compensation and ranges for such elements are not based on any formal analysis nor is there any documentation of this decision making process.

        The Compensation Committee also has access to numerous performance measures and financial statistics prepared by TDS. This financial information includes the audited financial statements of TDS, as well as internal financial reports such as budgets and actual results, operating statistics and other analyses. In 2009 (and 2010 with respect to the performance bonus for 2009), the Compensation Committee also considered information from TDS' compensation consultant, Towers Watson, and its independent compensation consultant, Compensation Strategies, as discussed above. The committee may also consider such other factors as it deems appropriate in making its compensation decisions. No specific measures of performance are considered determinative in the compensation of executive officers. Instead, all the facts and circumstances are taken into consideration by the Compensation Committee. Ultimately, it is the informed judgment of the committee, after reviewing the compensation information provided by the Vice President—Human Resources, TDS' compensation consultant, Towers Watson, and its independent compensation consultant, Compensation Strategies, that determines the elements of compensation and total compensation for the executive officers.

        The base salary element of compensation of each officer is set within the range identified for this element based on an assessment of the responsibilities and the performance of such officer, also taking into account the performance of TDS and/or its business units or divisions, other comparable companies, the industry and the overall economy during the preceding year. Column (c), "Salary," of the below Summary Compensation Table includes the dollar value of base salary (cash and non-cash) earned by the identified executive officers during 2009, 2008 and 2007, whether or not paid in such year.

        Beginning with the 2007 performance year relating to bonuses that were paid in 2008, TDS established performance guidelines and procedures for awarding bonuses to certain officers (not including the President and CEO of each of TDS, U.S. Cellular and TDS Telecom). These guidelines and procedures were filed by TDS as Exhibit 10.1 to TDS' Form 10-Q for the quarter ended March 31, 2007, and an amendment thereto was filed by TDS as Exhibit 10.5 to TDS' Form 8-K dated November 19, 2008. For the 2008 performance year relating to bonuses that were paid in 2009, 70% of such officer's target bonus was based on his/her assessed performance. The remaining 30% was based on performance of TDS, based on the weighted average of the percentage achievement of target of U.S. Cellular and TDS Telecom. However, notwithstanding anything to the contrary, 100% of the bonus with respect to 2008 performance was discretionary and was not earned by the officer unless and until awarded and paid. The calculations of the bonus amounts for the named executive officers that received bonuses pursuant to these guidelines with respect to 2008 performance that were paid in 2009 is reflected below.

        As a result of the foregoing process, bonuses with respect to 2008 performance were not earned by the executive officers until they were approved and awarded in 2009. Similarly, bonuses with respect to 2007 and 2006 performance were not earned by the executive officers until they were approved and awarded in 2008 and 2007, respectively. Accordingly, bonuses with respect to 2008 performance are included in the below Summary Compensation Table as compensation earned in 2009 and bonuses with respect to 2007 and 2006 performance are included in the below Summary Compensation Table as compensation earned in 2008 and 2007, respectively. These amounts are included in column (d), "Bonus," of the below Summary Compensation Table.

        In addition, beginning with the 2008 performance year relating to bonuses that were paid in 2009, TDS established performance guidelines and procedures for awarding bonuses to the President and CEO. These guidelines and procedures were filed by TDS as Exhibit 10.2 to TDS' Form 8-K dated November 19, 2008. These guidelines and procedures provide that the Compensation Committee in its sole discretion determines whether an annual bonus will be payable to the President and CEO for a

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performance year and, if so, the amount of such bonus, and describe factors that may be considered by the committee in making such determination, including any factors that the committee in the exercise of its judgment and discretion determines relevant. The guidelines and procedures provide that no single factor will be determinative and no factor will be applied mechanically to calculate any portion of the bonus of the President and CEO. The entire amount of the bonus is discretionary. The guidelines and procedures provided that the President and CEO will have no right or expectation with respect to any bonus until the committee has determined whether a bonus will be paid for a performance year, and any such bonus was not earned or vested until the date the bonus was paid. The guidelines also provide that any bonus awarded with respect to a performance year will be paid during the period commencing on the January 1 immediately following the performance year and ending on the March 15 immediately following the performance year.

        The guidelines and procedures for awarding bonuses to the President and CEO and other officers were amended effective January 1, 2009. These guidelines and procedures were filed by TDS as Exhibits to TDS' Form 8-K dated November 18, 2009. Prior to such amendments, such guidelines and procedures provided that bonuses were not earned until the date the bonus is paid. As a result, bonuses were not reported as earned in the Summary Compensation Table until the year in which bonuses were paid. Effective for 2009, the foregoing guidelines and procedures were amended to provide that, to the extent and only to the extent that any bonus is paid for a performance year, such bonus shall be deemed to have been earned on December 31 of that performance year. For accounting purposes, TDS has been accruing bonuses in the performance year as required by Generally Accepted Accounting Principles. The effect of the amendment to the guidelines and procedures is that TDS will also now be reporting bonuses in the performance year for purposes of the Summary Compensation Table in its proxy statement. In addition, the percentages used for individual and company performance were changed effective January 1, 2009. For the 2009 performance year relating to bonuses that were paid in 2010, 60% of such officer's target bonus was based on his assessed performance. The remaining 40% was based on performance of TDS.

        As a result of such amendments, the bonus paid in 2010 relating to performance in 2009 is being reported as earned in 2009 in the Summary Compensation Table. Accordingly, the below Summary Compensation Table in this 2010 proxy statement includes both the bonus relating to 2008 performance that was paid and earned in 2009 pursuant to the prior guidelines and the bonus relating to 2009 performance that was paid in 2010 pursuant to the amended guidelines.

        In addition, the President and CEO of TDS Telecom is a named executive officer of TDS for the first time as of December 31, 2009. The TDS Telecom Chairman and TDS Compensation Committee have established performance guidelines and procedures for awarding bonuses to the President and CEO of TDS Telecom. These guidelines were filed as Exhibit 10.27 to TDS' Annual Report on Form 10-K for the year ended December 31, 2009. These guidelines and procedures provide that the TDS Telecom Chairman and TDS Compensation Committee in their sole discretion determine whether an annual bonus will be payable to the TDS Telecom President and CEO for a performance year and, if so, the amount of such bonus, and describe factors that may be considered by the TDS Telecom Chairman and TDS Compensation Committee in making such determination, including any factors that they in the exercise of their judgment and discretion determine relevant. The guidelines and procedures provide that no single factor will be determinative and no factor will be applied mechanically to calculate any portion of the bonus of the President and CEO of TDS Telecom. The entire amount of the bonus is discretionary. The guidelines and procedures provide that the President and CEO of TDS Telecom will have no right or expectation with respect to any bonus until the TDS Telecom Chairman and TDS Compensation Committee have determined whether a bonus will be paid for a performance year, and any such bonus is not vested until the date the bonus is paid. The foregoing guidelines and bonus plan also provide that, to the extent and only to the extent that any bonus is paid for a performance year, such bonus shall be deemed to have been earned on December 31 of that performance year. The guidelines also provide that any bonus awarded with respect to a performance year will be paid during the period commencing on the January 1 immediately following the performance year and ending on the March 15 immediately following the performance year.

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        The following discusses annual cash compensation with respect to the specified named executive officers.

President and CEO

        The Compensation Committee evaluates the performance of the President and CEO of TDS in light of the annual and ongoing objectives for TDS and for its primary business units and the attainment of those objectives, and sets the elements of compensation for the President and CEO based on such performance evaluation and compensation principles.

        In addition to the general facts and circumstances that are considered for all executive officers as discussed above, facts and circumstances that the Compensation Committee considers in determining the annual cash compensation of LeRoy T. Carlson, Jr., the President and CEO of TDS (whom we sometimes refer to as "TDS CEO" in this discussion), include the following: the responsibilities of the TDS CEO; the period of time that the TDS CEO has held this position and served with TDS; the Compensation Committee's subjective view of the TDS CEO's contribution to the growth and development of TDS during that time; the fact that TDS is a holding company that includes two primary subsidiaries, TDS Telecom and U.S. Cellular; the fact that the TDS CEO is the Chairman of each of such subsidiaries; the prior year's performance of TDS Telecom (as discussed above) and U.S. Cellular (as discussed in the U.S. Cellular proxy statement); the overall performance of TDS, as discussed above; the performance of the TDS CEO, as discussed below; the personal objectives of the TDS CEO for the preceding year, as discussed below; the annual cash compensation of the other named executive officers, including the salary increase and bonus granted to each of such other officers, as discussed below; and the fact that the TDS CEO has a substantial beneficial interest in TDS, as described below under "Security Ownership of Management", and will benefit together with other shareholders based on the performance of TDS.

        With respect to the TDS CEO, the Compensation Committee considers the overall performance of TDS based on the weighted average performance of TDS Telecom and U.S. Cellular, as discussed above. No minimum level of performance is established for overall TDS performance. Instead, the Compensation Committee considers overall TDS performance after the fact but without any predetermined threshold performance level.

        Due to the change in the bonus guidelines discussed above, the following shows the level of achievement with respect to 2008 and 2009.

2009 Performance

        As noted above, the overall percentage achievement of performance targets with respect to 2009 was 74.8% for TDS Telecom. As discussed in the U.S. Cellular proxy statement, the adjusted overall percentage achievement of performance targets with respect to 2009 was 72.0% for U.S. Cellular. As discussed above, the weighted average performance of these business units was 72.7%.

        The following provides information with respect to the achievement of the TDS CEO's personal objectives for 2009 related to the management of TDS and its business units: (i) TDS' adjusted overall company performance was 72.7% of target, as discussed above, (ii) TDS assisted U.S. Cellular and TDS Telecom in identifying and exploring attractive business opportunities, including evaluation of potential acquisition and development opportunities, resulting in the acquisition of one incumbent local exchange carrier by TDS Telecom and the acquisition by U.S. Cellular of several 700 MHz licenses that will enable U.S. Cellular to deploy 4G wireless services in a number of key markets, (iii) although TDS did not meet its objective of obtaining certain other additional spectrum at reasonable prices, this objective was not achieved due to uneconomic cost and interference issues, (iv) TDS pursued advocacy efforts with governmental regulatory authorities to seek to increase spectrum availability at reasonable prices, (v) TDS oversaw the strategies and programs of U.S. Cellular and TDS Telecom to deliver high levels of customer satisfaction and to successfully differentiate in the marketplace, resulting in continued achievement by U.S. Cellular of industry-leading customer satisfaction scores, and continued strong customer satisfaction results by TDS Telecom in spite of increasing competition, (vi) TDS assisted U.S. Cellular and TDS Telecom to identify and realize additional cost savings initiatives, including cost

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savings in handset pricing and procurement, procurement of other supplies and services and inter-carrier compensation, and efficiencies in streamlining financial and cash management processes, (vii) TDS pursued all reasonable measures to select optimal IT systems, including the Business Support Systems/Operating Support Systems (BSS/OSS) for U.S. Cellular and a new mainframe platform, primarily for TDS Telecom, (viii) TDS and U.S. Cellular successfully replaced their revolving credit agreements on competitive or better than competitive terms in spite of a challenging credit environment, (ix) TDS completed its $250 million share repurchase authorization that was approved in 2008 and commenced a new $250 million share repurchase authorization in 2009, and U.S. Cellular continued and increased its share repurchase authorization to offset dilution from compensation programs, and (x) TDS continued to fully staff its accounting and control functions and increased automation of its accounting functions, including revenue and fixed asset accounting systems.

        The Compensation Committee did not perform an individual assessment and analysis of each of the foregoing objectives. Each of the members of the Compensation Committee is a member of the TDS board of directors, and participates in regular and special board meetings where TDS' objectives and progress relating thereto are presented, considered and discussed. Based on such participation and the foregoing achievements, the Compensation Committee believes that the TDS CEO's overall individual performance exceeded expectations in 2009.

2008 Performance

        As noted above, the adjusted overall percentage achievement of performance targets with respect to 2008 was 100% for TDS Telecom. As discussed in the U.S. Cellular proxy statement, the adjusted overall percentage achievement of performance targets with respect to 2008 was 55% for U.S. Cellular. As discussed above, the weighted average performance of these business units was approximately 66.25%.

        The following provides information with respect to the achievement of the TDS CEO's personal objectives for 2008: (i) TDS' adjusted overall company performance was approximately 66.25% of target, as discussed above, (ii) TDS remediated a material weakness related to income taxes and made excellent progress on significant deficiencies, continued to fully staff the accounting and control functions, filed all financial statements on time, improved accounting processes and increased accounting automation, (iii) considerable effort was made to obtain additional spectrum for the Chicago market at reasonable prices, but this objective was not achieved due to prices that were not considered to be reasonable, (iv) TDS, as the limited partner in King Street Wireless, successfully worked with the general partner of King Street Wireless in Auction 73 conducted by the FCC, resulting in 152 FCC licenses being acquired by King Street Wireless for $300.5 million covering 40.6 million pops, (v) TDS assisted, supported, and helped guide TDS Telecom's evaluation and execution of certain ILEC acquisitions, (vi) TDS and U.S. Cellular did not negotiate bank revolvers due to turmoil in the credit markets, but this was later accomplished in 2009, (vii) TDS improved the security of IT operations and customers and employee/associate data across TDS in 2008, and (viii) TDS purchased $200 million of its stock and U.S. Cellular purchased $33 million of its stock.

        The Compensation Committee did not perform an individual assessment and analysis of each of the foregoing objectives. Each of the members of the Compensation Committee is a member of the TDS board of directors, and participates in regular and special board meetings where TDS' objectives and progress relating thereto are presented, considered and discussed. Based on such participation and the foregoing achievements, the Compensation Committee believes that the TDS CEO's overall individual performance exceeded expectations in 2008.

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Base Salary

        The base salary of Mr. Carlson was $1,275,000 for 2008 and the Compensation Committee determined not to increase this amount in 2009. Accordingly, the base salary of Mr. Carlson remained at $1,275,000 for 2009. The range considered in approving Mr. Carlson's base salary for 2009 was approximately $1,030,000 to $1,220,000. This range was based on a survey from TDS' compensation consultant, Towers Watson, and represented the 50th to 75th percentiles, respectively, of a population of comparable base salaries. See "Benchmarking" above.

        For disclosure purposes, the base salary of Mr. Carlson for 2010 was increased to $1,313,300.

Bonus

        Bonus Paid in 2010 for 2009 Performance: In March 2010, the Compensation Committee approved a bonus of $825,000 for Mr. Carlson with respect to 2009 performance, which was paid in 2010. Mr. Carlson's informal target bonus percentage with respect to the 2009 bonus paid in 2010 was 75% of his 2009 base salary of $1,275,000, or $956,250. Mr. Carlson's bonus of $825,000 was approximately 86.3% of his target. This reflects the overall company performance of approximately 72.7% for 2009 and the Compensation Committee's assessment of Mr. Carlson's personal achievements and performance as discussed above.

        Bonus Paid in 2009 for 2008 Performance: Also, in 2009, the Compensation Committee approved a bonus of $655,000 for Mr. Carlson with respect to 2008 performance, which was paid in 2009. Mr. Carlson's informal target bonus percentage with respect to the 2008 bonus paid in 2009 was 75% of his 2008 base salary of $1,275,000, or $956,250. Mr. Carlson's bonus of $655,000 was approximately 68% of his target. This reflects the overall company performance of approximately 66.25% for 2008 and the Compensation Committee's assessment of Mr. Carlson's personal achievements and performance as discussed above.

Other Executive Officers

        With respect to the officers identified in the Summary Compensation Table other than the TDS CEO, the Compensation Committee considers the TDS CEO's evaluation of the performance of such executive officers and sets the annual base and bonus compensation levels for such executive officers based on such performance evaluations and the compensation principles described above. In addition to the general factors described above, the compensation elements of certain officers are based on their specific responsibilities.

Executive Vice President and Chief Financial Officer

        In addition to the general facts and circumstances that are considered for all executive officers as discussed above, additional facts and circumstances that the TDS CEO and Compensation Committee consider in determining the annual cash compensation of the Executive Vice President and Chief Financial Officer (whom we sometimes refer to as "CFO" in this discussion) are as follows: the responsibilities of the CFO; the period of time that the CFO has held this position and served with TDS; the Compensation Committee's subjective view of the CFO's contributions to TDS during that time; the prior year's performance of TDS, as discussed above; the Compensation Committee's subjective view of the CFO's contributions to such performance of TDS; the CFO's relationship with management and personnel of U.S. Cellular and TDS Telecom; whether there has been any restatement of financial statements and the nature of any such restatement; progress in improving internal controls and remediating material weaknesses; and the TDS CEO's assessment of achievement of personal objectives of the CFO for the preceding year, as discussed below.

        Mr. Meyers' cash compensation in 2009 consisted of (i) his base salary as an officer of TDS in 2009 and (ii) the bonus earned by Mr. Meyers under the guidelines and procedures described above. Mr. Meyers' base salary as TDS' CFO for 2009 was established and approved by the Compensation Committee based on the recommendation of the TDS CEO considering a range based on a survey from

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TDS' compensation consultant, Towers Watson, of a population of comparable base salaries, as discussed above under "Benchmarking."

Base Salary

        Mr. Meyers' base salary was evaluated based on his responsibilities as TDS' CFO, and considering the compensation of officers at comparable companies with similar responsibilities. The range considered in approving Mr. Meyers' base salary for 2009 was approximately $515,000 to $585,000. This range was based on a survey from TDS' compensation consultant, Towers Watson, and represented the 50th to 75th percentiles, respectively, of a population of comparable base salaries. See "Benchmarking" above. The base salary approved for Mr. Meyers for 2009 was $614,000, representing a 3.2% increase over his 2008 base salary of $595,000.

        The salary of $614,000 exceeds the 75^th percentile for the following reasons: Prior to his appointment as CFO of TDS, Mr. Meyers was the Executive Vice President—Finance, Treasurer and Chief Financial Officer of U.S. Cellular for many years and had been employed by U.S. Cellular in financial and accounting capacities since 1987. Mr. Meyers became the Executive Vice President and Chief Financial Officer of TDS on January 1, 2007. Mr. Meyers was promoted to this position to succeed the former CFO with general directions to improve the accounting and finance functions of TDS and its business units, complete the restatement of financial statements, remediate material weaknesses, file all future financial statements on time and without further restatements, fully staff accounting and control functions enterprise-wide, develop detailed system-wide accounting policies and processes, improve the budget process, and improve relationships and communications with outside auditors, outside counsel, directors, other officers, management, business units, and the business development, corporate strategy and enterprise strategy groups. Since that time, Mr. Meyers' performance at TDS has exceeded expectations. Accordingly, the TDS CEO and Compensation Committee believe that Mr. Meyers' base salary is at an appropriate level considering the importance of Mr. Meyers' responsibilities, his performance at TDS since 2007, his long period of service to U.S. Cellular and TDS and his extensive experience with and knowledge of U.S. Cellular and TDS and the telecommunications industry.

        For disclosure purposes, the base salary of Mr. Meyers for 2010 was increased to $632,500.

Bonus

        Bonus Paid in 2010 for 2009 Performance: Mr. Meyers received a bonus of $334,300 with respect to 2009 performance, which was paid in 2010. Mr. Meyers' target bonus was 50% of his 2009 base salary of $614,000, or $307,000, of which 40% is for company performance and 60% is for individual performance. As described above, TDS' adjusted performance was 72.7% of target for 2009. Mr. Meyers' bonus of $334,300 represents a bonus of 72.7% of his target bonus for company performance and 133% of his target bonus for individual performance. The individual performance percentage was based on the recommendation of the TDS CEO, reflecting the fact that Mr. Meyers' performance in 2009 exceeded expectations, as discussed below.

        The TDS CEO believes that the CFO's overall individual performance exceeded expectations in 2009. In particular, the following provides additional information with respect to the CFO's achievements in 2009: Mr. Meyers (i) maintained solid control over financial reporting and accounting, (ii) continued to improve relations with the outside auditor, (iii) successfully managed significant share repurchases, (iv) successfully oversaw the replacement of the revolving credit agreements at TDS and U.S. Cellular, (v) maintained a careful investment posture with the liquid assets of the TDS enterprise, (vi) continued to have an excellent culture in the finance, control and other areas of responsibility, (vii) provided excellent contributions to the strategy process at the TDS board of directors, U.S. Cellular board of directors, TDS enterprise strategy group and TDS corporate strategy group, (viii) worked closely with outside consultants to develop long-run strategic views, (ix) provided excellent guidance on several high level organization design and executive appointment issues, (x) provided sound and effective oversight of accounting and control at U.S. Cellular and TDS Telecom, (xi) provided sound review of proposed strategies and budgets of business units and recommendations for improvement, (xii) provided capable and trusted interface between TDS corporate and key business unit executives, (xiii) made excellent

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presentations to TDS board of directors, (xiv) participated strongly and well as a member of each of the TDS and U.S. Cellular board of directors, (xv) successfully found and integrated a successor to the TDS Vice President of Corporate Relations, (xvi) helped in transitions on the TDS board of directors and U.S. Cellular board of directors, (xvii) maintained and built excellent relations with each of the TDS and U.S. Cellular board of directors, and (xviii) contributed to the process of reforming post-retirement health and medical benefits for TDS and TDS Telecom.

        Bonus Paid in 2009 for 2008 Performance: Also, in 2009, the Compensation Committee approved a bonus of $329,900 for Mr. Meyers with respect to 2008 performance, which was paid in 2009.

        Mr. Meyers' target bonus was 50% of his 2008 base salary of $595,000, or $297,500, of which 30% is for company performance and 70% is for individual performance. As described above, TDS' adjusted performance was 66.25% of target for 2008. Mr. Meyers' bonus of $329,900 represents a bonus of 66.25% of his target bonus for company performance and 130% of his target bonus for individual performance. The individual performance percentage was based on the recommendation of the TDS CEO, reflecting the fact that Mr. Meyers' performance in 2008 exceeded expectations, as discussed below.

        The following discusses the CFO's goals and achievements in 2008: Mr. Meyers (i) completed process improvements resulting in removal of TDS' remaining material accounting weakness in tax accounting, made substantial progress in automating certain accounting processes, upgraded accounting and control staff, developed and provided guidance to existing accounting/control staff, and improved relationships with PricewaterhouseCoopers LLP, TDS' independent registered public accountant, (ii) strongly contributed to corporate strategy group and enterprise strategy group process, discussion and action, (iii) maintained excellent relations with U.S. Cellular senior executive leadership, fostering cooperation and teamwork between TDS and U.S. Cellular, (iv) continued to develop understanding of TDS Telecom's business to become a valued major contributor in discussions of TDS Telecom strategy, (v) provided excellent contribution to all corporate development activity, (vi) spearheaded development of and personified the TDS Mission, Values and Behaviors, (vii) successfully brought the variable prepaid forward contracts to a conclusion on favorable terms, (viii) maintained a prudent posture regarding investment of TDS' and U.S. Cellular's liquid funds, (ix) provided sound direction on repurchases of TDS common and special common stock and also of U.S. Cellular stock, (x) made high quality presentations to the TDS board of directors based on high quality written materials provided in advance of the meetings, (xi) made excellent contributions to board discussions at both TDS and U.S. Cellular, (xii) did an outstanding job representing the company and U.S. Cellular at investor conferences and in one-on-one meetings with investors, (xiii) brought other staff along to higher levels of responsibility and achievement, (xiv) provided fine working relationships between accounting and control staff throughout TDS and the business units, (xv) led the substantial portion of TDS Corporate associates/employees for which he was responsible to high enthusiasm and high marks on the TDS Corporate Culture Survey, (xvi) maintained excellent relationships with audit committees of TDS and U.S. Cellular, (xvii) provided excellent counsel to the TDS CEO on a large number of important issues, (xviii) provided creative, unique and constructive ideas to TDS executives on a wide-range of situations and (xix) although TDS and U.S. Cellular did not achieve the objective of negotiating bank revolvers in 2008 due to turmoil in the credit markets, this was later accomplished in 2009 under the direction of the CFO. As a result, the TDS CEO believes that the CFO's performance exceeded expectations in 2008.

Senior Vice President of Acquisitions and Corporate Development

        In addition to the general facts and circumstances that are considered for all executive officers as discussed above, additional facts and circumstances that the TDS CEO and Compensation Committee consider in determining the annual cash compensation of the Senior Vice President of Acquisitions and Corporate Development (whom we sometimes refer to as "SVP-ACD" in this discussion) are as follows: the responsibilities of the SVP-ACD; the period of time that the SVP-ACD has held this position and served with TDS; the Compensation Committee's subjective view of the SVP-ACD's contributions to TDS during that time; the prior year's performance of TDS, as discussed above; the Compensation Committee's subjective view of the SVP-ACD's contributions to such performance of TDS; and the TDS

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CEO's assessment of achievement of personal objectives of such officer for the preceding year, as discussed below.

Base Salary

        Mr. Williamson's base salary was evaluated based on his responsibilities as SVP-ACD, and considering the compensation of officers at comparable companies with similar responsibilities. The range considered in approving Mr. Williamson's base salary for 2009 was approximately $385,000 to $415,000. This range was based on the survey from TDS' compensation consultant, Towers Watson, and represented the 50th to 75th percentiles, respectively, of a population of comparable base salaries. See "Benchmarking" above. The base salary approved for Mr. Williamson for 2009 was $583,000, representing a 3.2% increase over his 2008 base salary of $565,000.

        The salary of $583,000 exceeds the 75^th percentile for the following reasons: Mr. Williamson has been a vice president and the chief corporate development officer of TDS since 1995. Mr. Williamson has been a senior vice president since 1998. TDS considers its corporate development activities to be key and integral business functions. Mr. Williamson also provides important services with respect to strategic planning for TDS and its business units. Mr. Williamson has consistently exceeded expectations during his lengthy tenure at TDS. As a result, Mr. Williamson's compensation has risen above the 75^th percentile as a consequence of his many years of service and salary increases over such period of time commensurate with his consistently high rating. The TDS CEO and Compensation Committee believe that Mr. Williamson's base salary is at an appropriate level considering the importance of Mr. Williamson's responsibilities and his consistently outstanding performance over a long period of time.

        For disclosure purposes, the base salary of Mr. Williamson for 2010 was increased to $594,500.

Bonus

        Bonus Paid in 2010 for 2009 Performance: Mr. Williamson received a bonus of $233,800 with respect to 2009 performance, which was paid in 2010. Mr. Williamson's target bonus percentage with respect to the 2009 bonus paid in 2010 was 35% of his 2009 base salary of $583,000, or $204,050, of which 40% is for company performance and 60% is for individual performance. As described above, TDS' adjusted performance was 72.7% of target for 2009. Mr. Williamson's bonus of $233,800 represents a bonus of 72.7% of his target bonus for company performance and 142.5% of his target bonus for individual performance. The individual performance percentage was based on the recommendation of the TDS CEO, reflecting the fact that Mr. Williamson's performance exceeded expectations, as discussed below.

        The Compensation Committee considers the TDS CEO's assessment of the achievements of the SVP-ACD. In particular, with respect to 2009, the following factors were considered: Mr. Williamson (i) provided excellent contribution to enterprise and business unit strategy development, (ii) managed extensive review of the possible acquisition of certain wireless properties and valuation of interests in connection therewith, (iii) facilitated new and promising roaming arrangements, (iv) facilitated the development of a business plan for the acquisition of hosting and managed services by TDS Telecom, (v) worked on numerous rural and incumbent local exchange carrier acquisition opportunities, (vi) managed the acquisition of a significant number of 700 MHz licenses, (vii) made excellent presentations to the TDS and U.S. Cellular boards of directors, (viii) made strong contributions in the enterprise strategy group and corporate strategy group, (ix) conducted outstanding development team education meetings, (x) maintained fine relationships with TDS small business partners, (xi) provided sound counsel to the TDS CEO on important matters and (xii) maintained fine relationships with other TDS and business unit executives.

        Bonus Paid in 2009 for 2008 Performance: Mr. Williamson received a bonus of $259,500 with respect to 2008 performance, which was paid in 2009. Mr. Williamson's target bonus percentage with respect to the 2008 bonus paid in 2009 was 35% of his 2008 base salary of $565,000, or $197,750, of which 30% is for company performance and 70% is for individual performance. As described above, TDS' adjusted performance was 66.25% of target. Mr. Williamson's bonus of $259,500 represents a bonus of 66.25% of his target bonus for company performance and 159% of his target bonus for individual performance. The

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individual performance percentage was based on the recommendation of the TDS CEO, reflecting the fact that Mr. Williamson's performance exceeded expectations, as discussed below.

        The following discusses goals and achievements of the SVP-ACD in 2008: Mr. Williamson (i) successfully participated with TDS' partner in Auction 73, which acquired valuable 700 MHz licenses at reasonable prices, (ii) obtained significant additional 700 MHz licenses at reasonable prices, (iii) successfully participated with TDS' partner in Auction 78, which acquired 1900 MHz licenses on favorable terms, (iv) oversaw consulting work at U.S. Cellular and at TDS Telecom, (v) worked with U.S. Cellular relating to possible purchase/trade of wireless properties, (vi) provided excellent reports to the TDS board of directors, (vii) provided excellent input to corporate and enterprise strategy groups, (viii) maintained an energized corporate development team, (ix) developed outstanding corporate development team meetings, (x) participated thoughtfully in matters relating to U.S. Cellular, (xi) analyzed many deals, avoiding poor acquisitions, (xii) maintained excellent relationships with TDS corporate and business unit executives, (xiii) completed several rural local exchange carrier ("RLEC") acquisitions which strengthened TDS Telecom's RLEC footprint and (xiv) undertook considerable effort to obtain additional spectrum for the Chicago market at reasonable prices, although the objective was not achieved due to prices that were not considered to be reasonable. As a result, the TDS CEO believed that Mr. Williamson's performance exceeded expectations in 2008.

TDS Telecom President and CEO

        In addition to the general facts and circumstances that are considered for all executive officers as discussed above, additional facts and circumstances that the Chairman of TDS Telecom and the TDS Compensation Committee consider in determining the annual cash compensation of the President and Chief Executive Officer of TDS Telecom (whom we sometimes refer to as "TDS Telecom CEO" in this discussion) are as follows: Mr. Wittwer's position and the fact that, as President and CEO of TDS Telecom, Mr. Wittwer is primarily responsible for the performance of TDS Telecom; the fact that Mr. Wittwer has held this position since January 2007; that previously Mr. Wittwer served as Executive Vice President and Chief Operating Officer (COO) of TDS Telecom, President of TDS Telecom's incumbent local exchange carrier operations and Executive Vice President—Staff Operations, Chief Financial Officer, Treasurer and Assistant Secretary of TDS Telecom, and has been employed by TDS Telecom since 1983; the fact that TDS Telecom is a wholly-owned subsidiary of TDS and is not publicly-traded; and the subjective views of the TDS Telecom Chairman and the TDS Compensation Committee of the extent to which Mr. Wittwer contributed to the performance of TDS Telecom during his employment at TDS Telecom.

        The TDS Telecom Chairman and the TDS Compensation Committee also considered the extent to which the TDS Telecom CEO contributed to TDS Telecom's performance with respect to the preceding year. As the TDS Telecom CEO, David A. Wittwer is the principal executive officer of TDS Telecom and supervises and controls all of the business and affairs of TDS Telecom. As a result, Mr. Wittwer is primarily responsible for the performance of TDS Telecom.

Base Salary

        Mr. Wittwer's base salary was evaluated based on his responsibilities as the TDS Telecom CEO, and considering the compensation of officers at comparable companies with similar responsibilities. The range considered in approving David A. Wittwer's base salary for 2009 as the TDS Telecom CEO was approximately $475,000 to $695,000. This range was based on a survey from TDS' compensation consultant, Towers Watson, and represented the 25^th to 75^th percentiles, respectively, of a population of comparable base salaries. The population of comparable base salaries was comprised one-half of the base salaries of chief executive officers of companies and one-half of the base salaries of sector heads of a major segment of a company's operations, similar in size to TDS Telecom. See "Benchmarking" above. The base salary approved for Mr. Wittwer for 2009 was $496,000, representing a 4% increase over his 2008 base salary of $477,000. The base salary approved for Mr. Wittwer for 2009 of $496,000 reflects the level considered to be appropriate in the judgment of the TDS Telecom Chairman and TDS Compensation Committee based on the factors discussed above.

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        For disclosure purposes, the base salary of the TDS Telecom CEO for 2010 was increased to $513,000.

Bonus

        Bonus Paid in 2010 for 2009 Performance: Mr. Wittwer received a bonus of $185,500 with respect to 2009 performance, which was paid in 2010. Mr. Wittwer's informal target bonus with respect to the 2009 bonus paid in 2010 was 50% of his 2009 base salary of $496,000, or $248,000. As described above, TDS Telecom's performance for 2009 was 74.8% of target. Mr. Wittwer's bonus of $185,500 was approximately 74.8% of his target for 2009. This primarily reflects the TDS Telecom performance of 74.8% for 2009 and the following achievements in 2009.

        With respect to the TDS Telecom CEO, the Compensation Committee considers the TDS Telecom Chairman's assessment of the achievements of the TDS Telecom CEO. As noted above, TDS Telecom's performance was 74.8% of target in 2009. In addition, the following discusses the TDS Telecom CEO's goals and achievements in 2009: Mr. Wittwer (i) drove a significant increase in DSL penetration, rapidly drove triple play penetration and drove long distance package penetration by TDS Telecom, despite a difficult economic environment, (ii) successfully introduced new package plans (bundles) that achieved rapid penetration, (iii) successfully moved many DSL customers to higher speed levels, (iv) increased penetration for managed IP services, (v) took steps to rationalize the CLEC business, moving the focus of the organization into small and medium business accounts and continued to develop separate suites of services for consumers and for small/medium businesses, (vi) successfully developed a strategic vision/plan for entry into the hosting and managed services areas for small and medium businesses, (vii) continued to improve fiber-to-the-home video offering in test markets, (viii) successfully integrated several rural local exchange carrier acquisitions, (ix) worked cooperatively with the TDS corporate development team, to investigate rural local exchange carrier and hosting/managed services acquisition opportunities, (x) made appropriate shifts in the focus of build-out plans, (xi) kept the TDS Telecom executive team highly motivated and moving forward, (xii) made excellent presentations to the TDS board of directors and TDS corporate development team, (xiii) participated effectively in enterprise strategy group, (xiv) kept TDS Telecom motivated and moving forward, while taking cost reduction steps, and (xv) successfully applied for and received stimulus grants. As a result, the TDS Telecom Chairman believes that the TDS Telecom CEO's performance exceeded expectations in 2009.

        Bonus Paid in 2009 for 2008 Performance: Also, in 2009, the Compensation Committee approved a bonus of $278,600 for Mr. Wittwer with respect to 2008 performance, which was paid in 2009. Mr. Wittwer's informal target bonus with respect to the 2008 bonus paid in 2009 was 50% of his 2008 base salary of $477,000, or $238,500. As described above, TDS Telecom's adjusted performance for 2008 was 100% of target. Mr. Wittwer's bonus of $278,600 was approximately 117% of his target for 2008. This reflects the TDS Telecom adjusted performance of 100% for 2008 and the subjective view of the TDS Telecom Chairman and TDS Compensation Committee that Mr. Wittwer's performance exceeded expectations in 2008, based on the following achievements.

        The following discusses the TDS Telecom CEO's goals and achievements in 2008. As noted above, TDS Telecom's adjusted performance was 100% of target in 2008. In addition, Mr. Wittwer (i) dramatically grew DSL customers and penetration, (ii) migrated DSL customers to higher speeds, (iii) dramatically grew the number of customers in triple play (voice, data, and video) bundles, (iv) achieved extremely low churn for customers in triple play bundles, (v) achieved modest rate of primary line loss compared to larger ILECs, (vi) rolled out managed IP services for business customers in CLEC and selected ILEC markets, (vii) grew long distance accounts despite lower physical lines (in ILEC), (viii) successfully integrated three acquisitions, reducing their cost structures, (ix) managed costs down to achieve cash flow budget, (x) continued implementation of Management Operating System, (xi) initiated a growth opportunity study and transferred ongoing responsibility to in-house resources from an outside consulting team, (xii) led effective efforts to preserve high cost funds, (xiii) identified several growth opportunities worthy of further exploration, (xiv) finalized 10 Gigabit backbone network plan (to drive simplification of rolling out new services) and selected vendors, (xv) continued focusing of capital spending on bringing fiber to more digital service areas, (xvi) when VDSL2+ rollout became impractical due to delays in equipment availability, adjusted capital planning to focus on bringing 10 Megabit speeds

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to as large a population of the ILEC customer base as possible, (xvii) kept top team together and motivated, (xviii) achieved record high new booked business revenue at CLEC, (xix) made effective presentations to the TDS board of directors, and (xx) maintained very high net promoter scores. As a result, the TDS Telecom Chairman believes that the TDS Telecom CEO's performance exceeded expectations in 2008.

Summary of Bonus Payments

        The following shows certain information with respect to each named executive officer relating to the amount of the bonus relating to 2009 performance (paid in 2010) showing the amount of bonus awarded as a result of the achievement of the above company performance measures and the amount awarded on a discretionary, individual basis:

Long-Term Equity Compensation

        The Compensation Committee also determines long-term equity compensation awards for the named executive officers under the TDS 2004 Long-Term Incentive Plan. The Compensation Committee may establish performance measures and restriction periods, and determine the form, amount and timing of each grant of an award, the number of shares of stock subject to an award, the purchase price or base price per share of stock associated with the award, and the time and conditions of exercise or settlement of the award and all other terms and conditions of the award.

        Although the Compensation Committee has the discretion to grant various awards, it generally only grants service-based restricted stock units and service-based options. The restricted stock units generally vest in full (cliff vesting) on December 15 in the second year following the grant, subject to continued employment. Options are exercisable until the tenth anniversary of the date of grant, subject to continued employment. Options granted in 2007 became exercisable on December 15 of the year of grant. However, TDS changed its policy beginning in 2008 so that options granted in 2008 and subsequent years become exercisable with respect to one-third of the number of shares subject to the option on each of the first, second and third anniversaries of the grant date.

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        With respect to long-term compensation, the Vice President—Human Resources prepares for the Compensation Committee an analysis of long-term compensation paid to similar officers of other comparable companies (see Benchmarking above). This information is presented to the committee, which approves the long-term compensation of the named executive officers in part based on such information. The committee also looks at the mix of salary, bonus and long-term incentive compensation, and obtains additional information from Compensation Strategies, as discussed above.

        Long-term compensation decisions for the named executive officers are made by the Compensation Committee in a manner similar to that described for annual base salary and bonus decisions, except that the stock options and restricted stock units will generally vest over several years, in order to reflect the goal of relating long-term compensation of the named executive officers to increases in shareholder value over the same period. The President and CEO may recommend to the Compensation Committee long-term compensation in the form of stock option and restricted stock unit grants, stock appreciation rights ("SARs") or otherwise for executive officers other than the President and CEO.

        The performance of TDS is also a factor in determining the number of restricted stock units which will be awarded with respect to the executive officers. The named executive officer receives an award of options and restricted stock units in the current year based on the achievement of certain levels of corporate and individual performance in the immediately preceding year.

        Executive officers do not become entitled to any options or restricted stock units as a result of the achievement of any corporate or individual performance levels. The award of options and restricted stock units is entirely discretionary and the named executive officer has no right to any options or awards unless and until they are awarded. Pursuant to SEC rules, awards with respect to 2008 performance are included in the Summary Compensation Table below as compensation earned in 2009. All awards are granted in consideration for future service over the vesting period of the award.

        The named executive officers, other than David A. Wittwer, received an award of restricted stock units in 2009 based on the achievement of certain levels of corporate performance in 2008. Mr. Wittwer declined to accept an award of restricted stock units in 2009. All of the named executive officers received an award of restricted stock units in 2008 and 2007 based on the achievement of certain levels of corporate performance in 2007 and 2006, respectively. Column (e), "Stock Awards," of the Summary Compensation Table includes the aggregate grant date fair value computed in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 718, Compensation—Stock Compensation ("FASB ASC 718") in 2009, 2008 and 2007.

        The named executive officers also received an award of options in 2009 based on the achievement of certain levels of individual performance in 2008 and received an award of options in 2008 and 2007 based on the achievement of certain levels of individual performance in 2007 and 2006, respectively. Column (f), "Option Awards," of the Summary Compensation Table includes the aggregate grant date fair value computed in accordance with FASB ASC 718 with respect to 2009, 2008 and 2007.

        Stock option awards represent a performance award based on an assessment of the individual's performance for the prior year. The restricted stock unit awards are based on TDS or business unit performance for the prior year. For awards granted in 2009 based on 2008 performance, the percentages of the total target long-term incentive value are 60% for performance stock options and 40% for restricted stock units. The total target long-term incentive value is determined primarily by multiplying the officer's salary by a multiple. The amount of this multiple is determined by the officer's title and job responsibilities and the benchmarking data from Towers Watson. See "Benchmarking".

        The value used for stock options and restricted stock units was determined by Towers Watson using a binomial methodology based on the stock price for TDS Special Common Shares of $23.35 on March 5, 2009. The values calculated by Towers Watson were $8.11 per TDS stock option and $20.21 per TDS restricted stock unit.

        As an example, the following provides information on how the foregoing was used to calculate the options and restricted stock units for the TDS CEO in 2009, and then describes how awards to other named executive officers were determined.

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        On May 21, 2009, the Compensation Committee awarded the TDS CEO stock options to acquire 244,000 TDS Special Common Shares based on 2008 individual performance. The TDS options granted on May 21, 2009 have an exercise price of $26.95 per share, which was the closing price of a TDS Special Common Share on May 21, 2009, become exercisable with respect to one third of the shares subject to option on each of the first, second and third anniversaries of the date of grant and are exercisable until May 20, 2019.

        On May 21, 2009, the Compensation Committee also awarded the TDS CEO restricted stock units with respect to 41,141 TDS Special Common Shares based on 2008 company performance. The TDS restricted stock units will become vested on December 15, 2011.

        As noted above, the 2008 base salary of the TDS CEO was $1,275,000. The multiple used for the TDS CEO was 246%. This multiple used by the Compensation Committee was based on the information from Towers Watson for CEOs of the companies included in the benchmarking data.

        The total target long-term incentive value for the TDS CEO using the above formula was $3,137,000, determined by multiplying $1,275,000 by 246%. Using this amount, the target allocation for each component of long-term compensation was determined by using the percentages identified above, as follows:

        Dividing the foregoing values by $8.11 per TDS stock option and $20.21 per TDS restricted stock unit results in the following calculation of the target options and restricted stock units. The following compares this target amount to the amounts granted by the Compensation Committee in 2009 to the TDS CEO:

        The Compensation Committee granted approximately 105% of the target of stock options based on its view that the TDS CEO had exceeded his personal objectives, identified above. With respect to the restricted stock unit amounts, the actual grant is 66.25% of the target grant based on TDS' overall performance in 2008 as discussed above.

        The following options and restricted stock units with respect to TDS Special Common Shares were granted to the other named executive officers in 2009:

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