In the first seven months of this year 40 million users plugged into China's Internet for the first time, about 7 million more than the entire population of Canada. For China's Web sites and telecoms, that's a server-straining rate of growth. For Beijing's privately held ChinaCache, it's the kind of statistic that fiber-optic fantasies are made of.

ChinaCache holds a near monopoly on the lucrative business of selling Internet-based companies a fast track through the country's congested cyberspace. Like Akamai or Limelight in the U.S., ChinaCache's content delivery network (CDN) offers to store Internet content such as video and applications in data centers distributed around the country. That geographic dispersal keeps data just a step away from impatient users and avoids the traffic jams that occur when companies need to deliver big files over an increasingly busy Internet.

ChinaCache's pay-for-play service is a valuable asset in a nation where the Internet hasn't caught up with its citizens' mass Web migration. The two broadband carriers that control most of the market--China Telecom and China Netcom--don't play well with each other. There are only three "peering points"--connections between networks--in the entire country, compared with around five public peering points and more than a dozen private ones across the U.S.

That relatively archaic system means a huge opportunity for the country's dominant data-pusher. ChinaCache controls 70% of the content delivery market in China, according to analysts' estimates. The firm racked up close to $50 million in revenue last year, double its sales from a year earlier, and became profitable in late 2008. "We believe there's still an enormous space for us to grow," says 45-year-old Chief Executive Wang Song. "When you look at what the carriers in this country are doing compared with the Internet in North America, that alone gives us a huge opportunity."

Wang stumbled into the potential for a Chinese CDN while running an it systems integrator known as Beijing Blue it in the late 1990s. "The Internet in China at the time was terrible," says Wang. "We had no clue of what a CDN was. We had never heard of Akamai."

Beijing Blue was installing systems for China's telecoms but finding it difficult to grow as a mere reseller of it hardware. Around the year 2000 Wang got wind of what Akamai was doing in the U.S.--selling a private Internet service--and realized he could reposition his company as a paid-service supplement to his telecom customers. Through his telecom contacts he arranged to lease extra bandwidth from China Telecom and China Netcom, using it to deliver content to servers that his company installed around the country.

Wang's insight struck just as China's Web portals began to catch the country's early wave of Internet eyeballs. His first customer was Sina.com--the popular portal site was struggling to handle the stream of visitors crashing its servers during the Sydney Summer Olympic Games. "Every time China won a gold medal, their CEO would get nervous," says Wang.

When ChinaCache proved it could prevent those outages and smooth out Sina's site experience, other portals signed on. By 2005 the company's sales had reached $10 million. Venture capitalists began to see the opportunity: Jafco Asia, Intel Capital and Investor Growth Capital pitched in $8.5 million, followed by another round of $32.5 million led by Ignition partners and Qiming Ventures in 2007.

Around the time of that second capital injection, ChinaCache found another mushrooming source of revenue: China's Web video boom. Streaming video sites like Tudou, Ku6, OuOu and 6rooms all began paying fat fees to pipe video files around the country. Tudou, for instance, was at one point paying ChinaCache between $500,000 and $700,000 a month to maintain the site's streams, according to research firm IDC.

In 2007, as ChinaCache began to plan an initial offering, its good fortune hit a snag. China's video sites were burning through their investment money without finding a business model, tapering off their CDN spending and shutting down. In early 2008 the government introduced new regulations that further whittled down the video market, killing or hamstringing some of ChinaCache's more lucrative customers. "Many of the video sites still owe us money," Wang laments.

Today its revenue from video customers, once nearly half of its sales, has shrunk to less than 10%. As last year's financial crisis cratered the U.S. and Chinese stock markets, ChinaCache put its public offering plans on hold. "Our primary aim is to focus on our own growth, to solidify the business," says Wang. "If the market recovers next year, we'll definitely look at that opportunity."

That means ChinaCache is diversifying. Last year it launched a service that lets customers accelerate the delivery of their online games and software. Gaming giant Tencent became an early customer. By hosting more complex data--fully functional applications rather than mere content--ChinaCache can generate higher margins, close to 50% higher profit per gigabyte of data, according to ChinaCache Chief Operating Officer Richard Xu.

The dent in China's video market still hurts. ChinaCache will fall short of doubling its annual revenue for the first time in 2009, Xu says, instead of increasing revenue between 75% and 85%--figures that sound disappointing only in China's larger-than-life Internet world.

Meanwhile, that Internet growth rolls on: Even though its online population is more than 338 million, three-quarters of the country has yet to use the Internet. In other words, it's a tough time to be a chief information officer, preparing your Web servers for more than a million new Web-goers a week--and a good time to be the company selling a shortcut.