In an unassuming office building in Santa Monica, not far from the city’s airport, an unheralded tech company quietly handles almost 5 percent of the world’s Internet traffic.

To put that number in context, if the bits of data on the Internet were equal to the world’s population, EdgeCast Networks Inc.’s take would be the size of the United States. And that might get larger after EdgeCast announced plans two weeks ago to expand its international presence and take on 50 new employees.

Although the company’s work is unseen by outsiders, it does support some big-name clients and events. Last month, for example, EdgeCast streamed the live online debate between Bill O’Reilly and Jon Stewart.

The company runs a “content delivery network” – a service that operates in the guts of the Internet and is a vital middleman between websites and consumers.

Traditionally, when people go to a website, their computers communicate with the site’s main server. But if the computer and server are in different parts of the world, the increased length of time it can take for messages to travel between the two causes a slight lag.

Content delivery networks solve that problem by placing remote servers around the world that have copies of the site’s content, meaning a shorter distance to travel and a quicker connection. The remote servers also work as a backup in case the main server goes down or is hacked, and can help handle heavy traffic demands, particularly from video streaming and ecommerce sites.

These online companies sign a contract with EdgeCast and pay for access to its proprietary software and network. Highly trafficked sites including Yahoo and Pinterest as well as popular gaming apps such as Fruit Ninja are all EdgeCast clients.

As the need for content delivery networks increases, EdgeCast, with more than 200 employees, has become one of L.A.’s largest and fastest growing tech startups. The company’s recently announced expansion will place servers in South America and add to its existing ones in Europe.

Content delivery networks are important for ecommerce sites because they cut seconds off a page’s load time. It might not sound like much, but as high-speed Internet has become commonplace, the collective patience for slow-loading sites has shrunk. Even the faint sense that a site isn’t working right for customers can have big financial impacts.

Nearly half of Web surfers expect a page to load in two seconds or less, and 79 percent of online shoppers are less likely to buy if they are dissatisfied with a site, according to a study by Forrester Research.

“If you put your credit card information in and it takes a while to load, you’re thinking, ‘Oh, someone’s stealing my credit card info or something bad is happening,’” said EdgeCast President James Segil. “Considering how much money goes through ecommerce, having a site that runs quickly makes a big difference.”

Big competitors

The tech world’s scramble to accommodate all the new online-enabled devices, and the customers who are using them to consume video and shop online, has been big business for EdgeCast. Despite high overhead costs, Segil said the company has been profitable for the past three years and is rapidly approaching yearly revenue in the “hundreds of millions.”

As EdgeCast expands, however, it’s running up against older and larger competitors that handle far greater swaths of the content delivery space. The largest of which, Akamai Inc. in Cambridge, Mass., is a $6 billion behemoth that controls as much as 30 percent of the world’s Internet traffic in works with almost every large ecommerce site. Segil hopes his company can cut into that lead.

But Donna Jaegers, a telecom analyst at D.A. Davidson & Co. in Denver, said EdgeCast is going to have a tough time competing with Akamai.

“The bigger you are, the lower your costs are going to be because the infrastructure is already set up,” Jaegers said. “Akamai has a record of aggressively fending off competitors by matching their prices or buying them out.”

Segil said EdgeCast has attracted some attention from other companies interested in possible acquisitions, but the firm has no intentions of being acquired.

The company’s management team – including Segil, Chief Executive Alex Kazerani and two other co-founders – has a history in tech startups in Los Angeles. Prior to EdgeCast, the four started KnowledgeBase, an online database service, which was later acquired.

In 2006, when the team decided to form a new venture, it looked to the burgeoning online video market. YouTube Inc. had just begun to take off and they wanted to jump aboard the bandwagon with its own video site.

But in the process of shopping around for content delivery networks that could host the videos, Segil saw an opening.

“With the rise of large video files and more people shopping online, I realized the current infrastructure couldn’t handle it. The Internet was going to break,” he said. “After getting off the phone with one of the content delivery networks, I looked around and said, ‘We should start our own.’”

EdgeCast got an initial round of funding from SteamBoat Ventures, the venture capital arm of Burbank’s Walt Disney Co. Since then, the company has held other venture capital rounds, raising $19.5 million to date.

EdgeCast has largely used the money to build up its network of servers around the world; it currently maintains more than 30 locations. Segil said the company will continue to expand and expects to reach 500 employees in the next few years. Already, EdgeCast workers are pushing the space limits of their quirkily colored Santa Monica offices.

Price wars

The costs of running a content delivery network are immense. Companies need to lease space to house the servers, and the machines themselves maintain a voracious appetite for electrical power.

In addition, the networks must continuously expand the infrastructure to offer faster service that meets the burdens of ever-increasing traffic. These costs take a toll on the bottom line; in fact, Segil said his company and Akamai are the only content delivery networks that turn a profit.

Executives at Akamai seem unconcerned about any threats from competitors. Although they declined to comment specifically about EdgeCast, they said that their massive network of servers and history as the dominant provider in the space remains unchallenged.

“We’ve spent 15 years with thousands of employees in research and development building our infrastructure and software,” said Tom Leighton, Akamai’s co-founder and chief scientist. “It’s just not realistic for a startup to reproduce that overnight or over a period of years.”

D.A Davidson’s Jaegers also expressed skepticism about EdgeCast’s ability to gain a much larger foothold in such a competitive field. Price wars have kept even the second largest content delivery network – Tempe, Ariz.’s Limelight Networks – operating at a loss.

Segil countered that EdgeCast’s smaller size and relative youth are assets. The older firms are tied to older technology, and he said his company’s software and lower operating costs give it an edge, so to speak.

But regardless of whether EdgeCast can pull customers away from bigger competitors, the Internet’s need for content delivery networks to handle all the new traffic might be enough for now.

“We’ve got videos streaming to tablets, mobile phones, laptops and set-top boxes,” Segil said. “We’re already needing to expand at such an insanely fast pace just to keep with our 5 percent.”