It's probably not quite as insane as it sounds until the rest of the internet catches up. I had 650 Mbps at Georgia Tech and realized most websites can deliver nowhere near that speed.
Now, if you think of businesses, then the demand for data throughput might be 10x greater or more. Depends on the type of the business and number of users (users also being servers).
I think I read somewhere that they are upgrading the ESNet backbone to be 100Gbit/s and GEANT's[3] to be 1000 Gbit/s, so I wouldn't immediately write off University/academic networking as automatically inferior to Google's.
Honestly it's hard to tell without knowing any of the details of how much capacity Google is provisioning in Kansas City (and how much contention there is). How much backbone fiber is laid to KS/MO - it doesn't seem to be where existing big-scale connectivity is (unlike say, DC Metro area where a ton of datacenters are located or London/Paris/Amsterdam).
[1] http://www.es.net/ [2] http://www.internet2.edu/ [3] http://www.geant.net/pages/home.aspx