It uses social engineering: It’s accepted that one of the most costly elements of building out a fiber network is the physical labor associated with strong cable, digging trenches and hiring people to terminate the fiber into the home. Google has already strung cable on power lines throughout Kansas City and lowered those costs by working with the local utility and AT&T to get access to the utility poles without having to pay high fees.

But to reduce the cost of the actual last mile to users’ homes it’s telling people in Kansas City that if they want to be the first to get fiber, they’ll have to convince their neighbors to sign up. The goal is to get a critical mass of between 5 percent and 25 percent of the homes in a given neighborhood (Google calls it a fiberhood) committed to signing up for Google Fiber before ever sending out technicians. Residents have until Sept. 9 to get their fiberhood on the leaderboard before Google starts rolling out its fiber.

Google’s Milo Medin and a Google fiber product manager.

Milo Medin, the VP of access services at Google, explained that with this model the folks in the first fiberhood will have their access within a week. This is also why the free service is so important to Google. If people buy into that process, it can get homes attached in those initial bulk deployments and reduce the number of times Google has to send out trucks and technicians. Medin says the $300 initial connection fee will cover the costs associated with the deployments — it’s not doing that at a loss either.

via http://gigaom.com/2012/07/26/the-economics-of-google-fiber-and-what-it-means-for-u-s-broadband/