BT seems to have taken two steps forward and one step back with its latest plans to re-enter the wireless market, less than six months after spinning off its mobile arm.

Its two-fold plans include re-launching a BT-branded mobile telephony service and setting up the UK's 'first public wireless broadband network'.

The wireless LAN network will allegedly enable people with mobile devices, such as laptops and PDAs, to send and receive data at broadband speed while on the move.

"We intend to build a national network of access points around key public sites such as hotels, railway stations, airports, bars and coffee shops, all within the reach of business travellers and commuters," said Pierre Danon, chief executive of BT's retail division.

The wireless network relies on an abundance of hotspots, or access points, which allow people with a 100-mile radius of the spot to use the network.

BT will initially focus on corporate customers and hopes to have 4,000 hotspots in place by June.

The wireless LAN network, which will be built in conjunction with Cisco systems and Motorola, will require approval from the Radiocommunications Agency before it can become operational. This is also expected to happen by June.

The re-launched BT-branded mobile service will not be buying it own networks, instead purchasing airtime from its from O2, its former mobile subsidiary.

"BT doesn't have a licence to set up its own network and working with partners offers a cheaper way of achieving our whole mobility strategy… Mobile telephony is just a part of that strategy," said a BT spokeswoman. "O2 focuses on consumers whereas we will be focusing on corporate customers."

BT insisted this is not a back door way of providing funding for O2, although its plan not to set up its own network is will be seen by many as a way of not treading on the toes of O2.

This so-called virtual network system is similar to that used by Virgin mobile which purchases airtime from T-Mobile (née One-2-One).

BT Cellnet renamed its mobile arm back in September, which was finally spun off at the end of last year, taking with it £500,000 of BT's debt bomb, then estimated to be around £20m.

BT hopes its new wireless venture will earn the company £500m per year over the next five years.