MTA CEO Janno Lieber said the wireless system, which will also include Wi-Fi at all 191 above-ground subway stations and 21 Staten Island Railway stations, will take about 10 years to complete.
He added that a vendor called Transit Wireless will pay for and install the system.
Phone and Wi-Fi service is already deployed at all 281 underground subway stations throughout the system. The proposed expansion would give riders the ability to use their mobile devices throughout the entire subway system.
The MTA says the program would generate revenue by marketing unused fiber to private customers.
Officials claim the project will result in over $1 billion in benefit for the MTA and its customers over the life of the agreement in terms of service provided, additional revenue and cost savings.
Work on the project will begin immediately and riders will be able to use the new services as each section is completed.
The MTA also agreed to move forward with a controversial congestion pricing toll plan for Manhattan.