Google has admitted to German and Irish authorities that they have been “mistakenly” collecting information transmitted over unencrypted wi-fi networks over the last three years.

The error was discovered when the concerned authorities in Germany asked for details of data collected by Google’s Street View cars, for Google Maps.

Google has admitted that they were “mistakenly collecting samples of payload data from open networks”. The data thus collected could include emails, photos, websites visited by individuals and businesses surfing on unencrypted Wi-Fi networks when the Street View cars passed by them.

A number of individuals, communities and even entire townships already oppose the Street View service, as they believe that photographs taken by the Street View cars are an invasion of privacy and could be easily misused.

The fact that Google has now been caught snooping private wireless networks will give privacy watchdogs more ammunition to fight their case.

In 2006-2007 a Google engineer wrote a piece of code on an experimental Wi-Fi project, which sampled publicly broadcast data of all categories. The data collected was supposed to be limited to SSID and MAC addresses broadcasted over non-password-protected networks.

It may be little consolation to know that most of the data collected is probably quite unintelligible.

Google suspended the use of Street View cars after the issue was brought to their notice. The company has also asked for a third party to study the case and find out exactly what caused the error and what kind of data was collected.

In what may be considered to be an apology, Google’s senior Vice President of Engineering and Research, Alan Eustace said, “Maintaining people’s trust is crucial to everything we do, and in this case we fell short.”

Google’s problems, though, are definitely not over. Soon after the German government disclosed the issue, the Irish Data Protection Authority ordered Google to delete all payload data collected in Ireland, and they won’t be the last. In fact, Google is sure to have a lot of explaining to do and may even have to face legal action.

A post on the Official Google Blog announced that the newly created wireless network will be a combination of Clearwire’s existing WiMax business, Sprint’s broadband infrastructure and the 2.5 GHz spectrum. The company will be 51% owned by Sprint but will be headquartered in Clearwire’s premises in Washington state.

Michael Mace, a principal at Rubicon Consulting reports that Google will provide search and applications such as Gmail, Maps and YouTube to the network’s users, in exchange for their contribution of $500 million. Clearwire will sell Google Android handsets. Google and Clearwire will also form an open Internet Protocol, which will be coordinated with mobile broadband devices and also Android powered devices.

Google has got a very good deal out of this partnership. If thing go according to plan, they could have direct access to a US-wide network of mobile Internet users for a fraction of the amount Verizon paid for the 700 MHz wireless spectrum.

This new network will allow its customers to choose their software applications, content and handsets as per their requirements. Users will thus be free to employ the openness principles of the Internet and have a mobile broadband experience that isn’t dictated by operator or handset manufacturer limitations.

Clearwire will build and maintain a WiMax network that will be able to support these new open standards for spectrum as well as wireless handsets. This new network will afford its users high-speed wireless Internet access throughout the United States. Users will be free to utilise any lawful applications, content and devices without any kind of censorship or blocking of Internet traffic.

According to Sprint, the WiMax network is not expected to be widely accessible until 2010. These are all forward looking statements and the end results may differ substantially from current projections.