Not entirely true.
There is quite a bit of new gear rolling out to compete with Google, but infrastructure isn't really a standalone expense. I can drop epic pipe sized Sonet multiplexers all over the place, but you also have to house them, power them, protect them and feed them fiber. Then you get to upgrade the other parts of the network to handle the tidal wave of data that will be flowing across those systems. This all costs equally epic amounts of $$$$ to do so. Nor does it happen overnight on a telco / carrier sized network. ( Trivia: Limiting the query to a single vendor only, the company has over twenty THOUSAND routers / switches in its network. This isn't something you can just upgrade and / or replace overnight. )
AT&T is investing plenty in the markets where most of its profits come from. The business / commercial markets. They know Google poses a serious threat to that revenue stream, so that's where all the investment is going currently. If I told you AT&T is in the process of installing at least ten THOUSAND sites across the country including all the infrastructure required to support it ( this is for Gigabit Ethernet btw ), would you still think the company isn't investing in its infrastructure ?
Granted, their focus probably isn't what it should be for the average consumer, but the data world is in a big transition period and technology is evolving faster than many can keep up. Hell, think about what a fast connection speed was ten - twenty years ago. The technology to even provide today's slower connection speeds didn't even exist. Ripping out and replacing everything every five years or so is pretty much impossible to do financially for a network this size.
The focus going forward is likely to be in wireless and broadband ( which is why the Title II thing scares the hell out of them ). They will, like the other telcos, probably exit the wireline market in the near future. The copper plant is simply no longer profitable and is cost prohibitive to maintain. ( Especially for a service that sees fewer and fewer customers every year. )
Do we need competition? Absolutely. It's what lights the fire under the behemoths to actually get up and do something once in a while. They get used to being the only player on the field and doing what they want. Then someone shows up and threatens the business model and all hell breaks loose. This is pretty much where we are today.
Will see how it plays out.