Jeffrey R. Hultman, president and chief executive of PacTel Cellular, likes to tell his employees that they are pioneers in a ''100-year business.''

Taking a long-term view keeps a decision such as which of two competing cellular phone technologies to adopt from seeming quite so daunting, he said. Even so, Hultman and other industry executives are grappling with the biggest technological transition in the industry's rather brief history.

They are modernizing the nation's cellular networks with second-generation digital technology that will allow cellular companies to squeeze more calls onto an already cramped waveband.

But while most of the industry has endorsed one new technology standard to improve and expand service, PacTel Cellular has chosen a different path.

The conversion to digital is expected to cost cellular phone suppliers hundreds of millions of dollars per market over a period of years, and the decision about which technology to use is critical.

PacTel Cellular, a subsidiary of San Francisco-based Pacific Telesis Group, has about 10 percent of the nation's cellular business and packs a lot of clout in the industry. So Hultman's decision to buck the industry's choice and instead champion a technology developed by a little-known San Diego company may compel the rest of the industry to follow, some analysts say.

But if the choice is wrong, Irvine, Calif.-based PacTel risks losing its leadership position in the fast-growing Los Angeles area, where it has 57 percent of the market. And the industry may lose its hope for a nationwide compatible network.

''I don't know if the technology will work yet,'' Hultman said. ''And we never want to get into a standards fight with the rest of the industry. But we will put this technology out in the marketplace and let the market decide if it is better.''

Hultman said he was skeptical when officials from Qualcomm Inc., a San Diego start-up company, approached him late last year and told him that its digital technology -- known as "code division multiple access," or CDMA -- would allow PacTel to squeeze 20 times more callers onto the existing network.

After all, just a few weeks earlier, at Hultman's recommendation, the Cellular Telecommunications Industry Association voted unanimously to adopt a digital technology called "time division multiple access," or TDMA, ending a two-year debate over industry standards. Because it emerged so late, CDMA was not considered at the time.

TDMA extracts three to seven times more capacity from the existing analog system by slicing a frequency channel into time slots that can be set aside for a call signal. The transmitter bursts a signal for a call for a given period of time and then alternates to another call. The caller can't notice the time gaps between the call signals because they are so short.

But CDMA systems, developed by the military to protect radio communications, spread a number of call signals across the available frequency spectrum simultaneously and assign a unique binary code to each signal. The signals are sorted from the background noise by a receiver that knows the code. The method uses the airwaves as efficiently as a skyscraper uses real estate, Qualcomm said.

Hultman's decision to back the CDMA standard -- although he said the company still has the option of switching to TDMA -- received some key support four weeks ago when American Telephone & Telegraph Co., Ameritech Mobile Communications Inc. and Nynex Mobile Communications Inc. said they would develop CDMA systems. AT&T makes cellular phones; Ameritech Mobile and Nynex Mobile are cellular arms of other Baby Bell companies.

Some industry observers said PacTel and others who support CDMA are hurting the industry by not being team players and endorsing the industry standard.

''What is disturbing is that certain companies {that support CDMA} are so willing to pursue a panacea that isn't proven and wasn't part of the testing process that arrived at a standard,'' said Eric Lissakers, director of planning and development for Ericsson Radio Systems, a Richardson, Tex., cellular phone manufacturer. ''They are looking at a rainbow instead of the planned evolution of a standard.''

Mark Buford, a spokesman for Northern Telecom Inc., a Canadian telecommunications manufacturer, said his company has endorsed TDMA but continues to explore CDMA as an alternative. He said that any changes now could result in higher development costs and a delay in the conversion to digital.

For its part, the Federal Communications Commission ruled in 1987 that carriers do not have to follow a particular standard, so the choice between the technologies could be made on a market-by-market basis.

But PacTel's Hultman argued that the advantages of CDMA technology are too big to ignore. He said the technology will lead the nation closer to a third-generation system -- a concept the industry has dubbed the "personal communications network," or PCN -- that could make cellular service as commonly used as today's wire-line telephone system.

PCN would allow customers to place calls on pocket phones that would be lighter than current cellular portable phones. Several companies in England are already providing pocket phone service. Nynex Corp. in New York plans to install a rudimentary version of a pocket phone system within the year, and a similar system is to be test marketed soon in Washington.

Hultman said PacTel could install a CDMA system in Los Angeles as early as the second half of 1991. That schedule could keep PacTel in the running to be the nation's first carrier to convert to digital service.

Nationwide, the number of cellular subscribers is expected to rocket from 3.5 million last year to at least 18 million by 1995, according to Herschel Shosteck, a cellular market researcher in Silver Spring.

Carriers can boost network capacity by building new cells and subdividing the coverage area into smaller cell sites, but eventually the costs become prohibitive.

Overall, the industry invested $4.5 billion in network improvements from 1984 to 1989, while generating a scant $3.3 billion in revenue, according to the Cellular Telecommunications Industry Association, a Washington-based trade group.

Alf Humphries, cellular analyst with Hanifen Imhoff Inc., an investment banking firm in Denver, estimated that the cellular industry will begin making a profit on its cumulative investment sometime in 1993.

''This business is difficult because it requires a lot of reinvestment,'' Humphries said. ''The network has to be replaced every three to five years, but once the profits start coming in they will be very good.''