Why pay half a million dollars for an 1800 sq foot 30 year old house when you can buy a brand new 3500sq ft house for the same price?
First of all, in-town bungalows are more like 70+ years old. That means they were better-built than new speculative construction and (if built before WWII) have lots of architectural detail that's too expensive to build today. If they're "the same price" (as opposed to "fixer uppers") then they've been renovated and insulated to modern standards, so utilities are cheaper. And most importantly, they're in walkable neighborhoods and close to jobs, so the commute is shorter and the lifestyle is better.
You wold fit in real good with one of my sister's friends who is spending $1400 a month for an 800 sq ft apartment in Brookhaven (just so she can say she lives in Brookhaven) while I pay $1300 a month to rent a 1700 sq ft house out in Woodstock.
Why would I do that when I'm paying about $700 a month for a mortgage (including taxes and insurance) on a 1500 ft^2 house in Atlanta (in the Atlanta city limits, near Decatur)? Granted, my neighborhood isn't as nice as Decatur, but it's a damn sight better than most parts of the suburbs.
By the way, before I bought my house (5 years ago) I lived in an 800 sq ft apartment on the south edge of Buckhead for $800 a month, and I'm sure it'd be no more than $900 or so now... unless that apartment is super-luxurious, your sister's friend is getting ripped off.
Now, I know Google is doing it on a neighborhood basis, so I doubt that most places in these cities won't get it as there are probably not enough people that can afford the $300 up front investment to make a whole neighborhood viable, so it will still be only the rich ones that get this. It just seems to me that picking areas where the income distribution isn't so large would open them up to more customers
Just under half the folks in my neighborhood are yuppies who can easily afford the $70/month gigabit service. The other half are older people who've been here for 20+ years, who would benefit from the free service. In fact, I would say that even having the yuppies create a fund to subsidize the installation fee for the others wouldn't be out of the question. In other words, Google Fiber is a great fit for my neighborhood almost because it's mixed-income. Unless it's competitive (where the rollout is limited to only the top X% of neighborhoods, rather than all that meet some threshold), I can see every neighborhood in the city qualifying except for the real slums, like English Avenue or Mechanicsville.