With the Indian enterprise data market poised to grow at a compounded annual growth rate (CAGR) of 12 per cent over the next five years, the Ethernet market is likely to grow at 39 per cent over the period, an industry expert said.

Ethernet is a physical and data link layer technology for local area networks, which is used by higher-level network protocols like Internet Protocol (IP) as their transmission medium.

Currently, the Indian enterprise data service market is worth around Rs 6,150 crore, which is only 11 per cent of the Rs 56,000-crore enterprise telecom market.

Out of the total data service market, contribution of the Ethernet service space is two per cent at around Rs 100-crore.

However, the segment is poised to grow to Rs 750 crore by FY 16, while the data service market would increase to around Rs 13,000 crore, Frost & Sullivan Senior Research Analyst Ravi Pandey told reporters here.

"The migration towards IP-based networks, operators focusing on Multiprotocol Label Switching (MPLS) to create virtual private networks (VPNs) services, evolution of border-less enterprises and creation of huge data centre build-outs in the last few years have led to an increase in demand for Ethernet services," he said.

Indian enterprises are looking out for new technologies to provide cheaper and effective ways to meet their capacity expansion plans, he said.

"Ethernet will provide a cheaper and cost-effective service for companies in the long run and enable them to control their capital and operational expenditures. Also the convergence of business, residential and wireless services would act as a key driver for the growth in the Ethernet market," Pandey added.