I worked briefly on the Fiber team when it was very young (basically from 2 weeks before to 2 weeks after launch - I was on loan from Search specifically so that they could hit their launch goals). The bottleneck when I was there were local government regulations, and in fact Kansas City was chosen because it had a unified city/county/utility regulatory authority that was very favorable to Google. To lay fiber to the home, you either need right-of-ways on the utility poles (which are owned by Google's competitors) or you need permission to dig up streets (which requires a mess of permitting from the city government). In either case, the cable & phone companies were in very tight with local regulators, and so you had hostile gatekeepers whose approval you absolutely needed.

The technology was awesome (1G Internet and HDTV!), the software all worked great, and the economics of hiring contractors to lay the fiber itself actually worked out. The big problem was regulatory capture.

With Uber & AirBnB's success in hindsight, I'd say that the way to crack the ISP business is to provide your customers with the tools to break the law en masse. For example, you could imagine an ISP startup that basically says "Here's a box, a wire, and a map of other customers' locations. Plug into their jack, and if you can convince others to plug into yours, we'll give you a discount on your monthly bill based on how many you sign up." But Google in general is not willing to break laws - they'll go right up to the boundary of what the law allows, but if a regulatory agency says "No, you can't do that", they won't do it rather than fight the agency.

Indeed, Fiber is being phased out in favor of Google's acquisition of WebPass, which does basically exactly that but with wireless instead of fiber. WebPass only requires the building owner's consent, and leaves the city out of it.