The telecoms reseller is to scour local communities across the country to find innovative uses of broadband internet by both businesses and individuals.
The initiative will identify the most inventive projects locally, hold 12 regional finals and a national final on September 12.
BT Wholesale will back the initiative with a radio and press ad campaign.
It has hired youth marketing agency Angel to create the advertising and sales promotion and manage local marketing activity. It has also given Angel the task of discovering gamers, DJs and musicians who are using broadband in an innovative way.
The project's brand identity and events have been overseen by Myriad Media. Entrants will be split according to home users, business users, government and voluntary sector.
A dedicated web site at broadbandbritainchallenge.co.uk will explain the concept and showcase some entrants' examples, including a project to construct a downloadable jukebox.
"This is all about bringing broadband to life to show ordinary people its benefits," said Philippa Winterburn, head of broadband marketing at BT Wholesale, the division of BT that resells telecoms and internet infrastructure to other retail providers, including BT Retail.
Although the initiative is separate from BT Retail, the Broadband Challenge web site will be promoted on its own broadband page.
Separately, BT Broadband is relaunching its 'landing page' today (Thursday) with 25 new partners including Virgin Megastores, Thomas Cook, Xbox Live, American Airlines and Sainsbury's.