Arthur E. Parsons can transmit the entire contents of the Encyclopedia Brittanica anywhere in the country in a quarter of a second. So can Joel Maloff. "With an error of one letter," says Maloff. "That's pretty good."

Parsons and Maloff can do this because their respective Rockville operations, Lightnet and National Telecommunications Network, use cables made of thin glass strands to transmit voice, video or data signals in short bursts of light. The new communications technology known as fiber optics is efficient, has easily expandable capacity, is more secure than other communication technologies and costs less to install.

Lightnet was born in 1983 as a joint venture between CSX Corp. and Southern New England Telecommunications, and NTN was formed in 1985 as a consortium of regional fiber optics firms. Together, they form the backbone of a group of companies that have built more than 20 networks around the country, stringing their cables along railway tracks, decommissioned pipelines and underground utility rights of way.

More than 20,000 miles of fiber-optic cable crisscross the United States, and competition is growing for business customers and federal agencies that can use the technology to create private communications networks.

Capturing a slice of the $8 billion private network market isn't easy -- AT&T dominates the field. Competition is intense between fiber network companies and major long distance companies such as US Sprint, AT&T and MCI Communications Corp., which are installing their own networks. So some companies are joining forces.

This month, Lightnet announced that it is hooking up with Williams Telecommunications Co. (WilTel) of Tulsa, Okla. The two companies will connect their facilities -- Lightnet serves customers east of the Mississippi and WilTel operates west of the river -- to provide their customers access to a 10,000-mile coast-to-coast network serving 78 cities.

Southernet and Southland Fibernet, companies based in Atlanta and Pensacola respectively, also are merging. WilTel recently swallowed up yet another regional company, LDX Net.

"It's really a natural shakeout in the industry," said Maloff, director of marketing at NTN. "The consolidation is the continuation of a trend where healthy companies are acquiring companies that are smaller or not so healthy," he said.

Lightnet and NTN are competitors, both of whom specialize in marketing private line services to major long distance companies, business customers and the federal government.

Companies that belong to National Telecommunications Network consortium include WilTel, Consolidated Network, Litel, Microtel, Southernet and Southland Fibernet. Because of its involvement with Lightnet, WilTel may reconsider its participation in NTN, analysts say.

WilTel and Consolidated Network specialize in private network services while the others provide additional services such as bulk long distance.

"Our niche is private networks, and we understand it," said Maloff. "It is a lucrative niche that was not being emphasized by the other major companies."

Competition has a price tag. NTN members that just recently completed their networks have invested $1 billion to install 12,000 miles of cable across the country. Lightnet's parent firms have invested $300 million to $600 million in the company, which predicts revenues in excess of $100 million this year. Lightnet rounded the profitability curve last year while NTN members are at or near profitability, officials say.

Lightnet has 70 customers, 50 of them corporations. Parsons credits CSX Corp., the diversified transportation, energy, technology and property conglomerate, for stumbling onto the idea of building its own network when MCI came knocking to lease rights of way along the old Chessie railway system for its own cable.

"Fiber optics is now the leading edge of the technology for data and communications because of its clarity and quality," said Parsons.

The technology is also key to keeping costs under control. "We will use services from any vendor where appropriate," said Robert Mhoon, director of telecommunications and engineering for FMC Co., a $3 billion Chicago conglomerate. "We find ... it allows us a much better negotiating position."

The company, which used AT&T exclusively several years ago, now uses AT&T, Lightnet, and LDX Net fiber services. Mhoon says competition between vendors has saved the company $461,000 a year in communications costs.

Larry Stockett, chairman of Fibernet -- a Portland, Ore., long distance company that relies on Lightnet, NTN and other fiber-optic companies -- said the companies have spawned competition in the industry.

"They are the only reason we are possible," he said. "Where Sprint spent $2 billion constructing {their fiber network} we spent $10 million just leasing," he said.

Price wars between the companies only boost profitability, he said. In the first six months of this year the start-up company has raked in $1 million in profits on $5 million in revenue and has signed up 10,000 customers.

Stockett's strategy is to introduce new technologies that operate over fiber-optic lines. One is the "fiberphone," a telephone that allows you to talk to and see the other parties, he said. Fiberphone is for lease or sale to business and residential customers.

Several years ago, analysts predicted a glut of fiber-optic capacity, but many companies canceled their construction plans in the face of grim predictions.

Still, some analysts say there may be three times the capacity needed before the turn of the century and that marketing has been tougher than companies like to admit.

Mara Novak, an analyst with the Gartner Group, says Lightnet had hoped to market more of its capacity to long distance companies, but because these companies are building and marketing their own networks, it has "abruptly" turned to corporate customers.

Lightnet's Parsons disagrees, saying revenue from marketing to long distance companies has allowed the company to turn to business customers.

Novak said there is a window of opportunity for companies to sign customers before AT&T completes its own fiber optic network, but continuing price wars threaten to drain the companies of profitability.

"Lightnet doesn't really know anything about selling to private business customers, and they are going to have to learn a lot," she said. "They have a very aggressive marketing program and the fiber network is in the ground. If they can get to customers they have a good chance."

NTN, which has a sales staff of eight in Rockville and leaves marketing up to its regional members, is moving toward a national network control center, but customers may still be leery of using their coast-to-coast service because of minor glitches in connections between networks, she said.

"These are . . . different companies that have to cooperate, and you're not sure the lines of cooperation are totally solid," she said.

The companies must also find new ways of marketing their services, said Jerome Lucas, president of TeleStrategies, a McLean consulting firm.

"They are discounting their services fantastically and they have to generate new applications," he said. Those new applications are going to be few and far between, he said.

"It's going to be a challenge; they are going to be facing a very competitive AT&T, and there is only so much traffic to carry away," Lucas said.

While the capacity may be needed in the 1990s, "the question is, can these companies survive?" said Lucas.

Lightnet's Parsons says the company isn't worried. Customer data flows are growing by about 40 percent a year, and fiber-optic technology, with low error rates, is particularly suited to data transmission, he said.

"We are replacing existing technologies as well as expanding into a variety of new areas of information flow such as computer to computer communications and video applications," says NTN's Maloff. "In the next four or five years there will be a shortage."