By the end of the year, small businesses in eastern Loudoun County will have a new choice for telecommunications services.

Advanced TelCom Group Inc., a Santa Rosa, Calif., company that recently scored one of the industry's largest venture capital investments, is moving into Loudoun and surrounding counties to compete with Bell Atlantic Corp., among others, in the local, long distance and Internet services arenas.

The company has been on an acquisition spree to expand on the East Coast. Last week, it acquired NewCommNet, of Frederick, Md., as part of its plan to offer service in Northern Virginia and Maryland.

Like Advanced TelCom, NewCommNet was a competitive local exchange carrier (CLEC), which challenged dominant providers in an area by installing its own fiber optic cable and other equipment rather than selling services using leased equipment. And, like TelCom, it focused on smaller commercial customers in second- and third-tier markets outside major cities.

Eastern Loudoun, with its burgeoning crop of high-tech start-up companies and home businesses, was a natural move for Advanced TelCom. "The plan was to . . . look at smaller communities that may have been bypassed so far on local service competition," said Harry Gowl, former chief executive of NewCommNet and now president of Advanced TelCom's eastern division.

More than 100 CLECs have sprung up in Virginia since the passage of the federal Telecommunications Act of 1996, which was intended to encourage competition. But many of them have clustered in Washington's inner suburbs. Advanced TelCom will woo businesses that have five to 50 phone lines, and increasing numbers of such companies are in the outer counties.

"Any time a new CLEC comes to town, it's the small and midsize customers who benefit the most," said Melanie Posey, an analyst with International Data Corp. in New York. Often, those companies cannot take advantage of the large-volume discounts offered by such major companies as Bell Atlantic, but companies like Advanced TelCom tend to offer lower rates.

Gowl said his company plans to offer such services as digital subscriber lines, which carry data at high speed over regular copper telephone lines, at rates 10 percent to 20 percent below those Bell Atlantic charges. In addition, Gowl said Advanced TelCom plans to build a service center in the Route 28 corridor staffed with sales and customer service representatives to be close to its customers and offer personalized attention.

Posey cautioned, however, that there is a downside to CLECs.

"Most say they have better customer service," she said, "but part of the reason is they don't have very many customers." As the number of customers increases, service can fall off.

In addition, CLECs often offer only a fraction of the products and services that companies like Bell Atlantic offer. For example, many do not offer services that allow small companies to have internal phone systems without spending money on expensive equipment.

Advanced TelCom initially will focus on communities east of Leesburg with a high volume of business activity. It will not serve South Riding, which now is served by GTE Corp., or Ashburn--although it could get service soon as businesses increase there, said Mark Ritter, a Sterling resident and vice president of business development for Advanced TelCom.

There is little economic incentive for most telecommunications companies to compete in largely residential areas, such as South Riding or areas west of Leesburg, where most customers want basic telephone service. Ritter said companies like TelCom often wait for a critical mass of businesses that will want enough additional services to warrant the investment.

A new competitor for commercial customers will not necessarily threaten Bell Atlantic and could even be beneficial, said Paul Miller, a spokesman for Bell Atlantic, which is in the process of acquiring GTE. Bell Atlantic must demonstrate that its markets are competitive to gain approval to enter the long distance arena. Besides, Miller added, "I think they may find it difficult to compete with us on service."

Gowl said he thinks small companies will disagree. The battleground, he said, will be the speed of installation, the ability to track services, and accurate and streamlined billing. He said many company owners he spoke with while conducting market research in Northern Virginia had never met their telephone company representative. "They just don't get the attention," Gowl said. "Our sales people will be there in the community."

Advanced TelCom also will be offering services in Prince William, Montgomery and Frederick counties, as well as parts of Fairfax County. The company has started installing its equipment, and "with a little bit of luck and a tail wind," Gowl said, might begin offering service as soon as Dec. 1.