Google has been planning this for a long while. They started buying up dark fiber since before they bought GrandCentral (Google Voice). They want to be a telco, and I'm alright with this.
And that's great but that means they're becoming a telco. Mind you, I'm not using "telco" in the "evil telco" sense; I'm using it just because I'm too lazy to type "telecommunications company".
I have got to think it has more to do with the network that is already in place than the location. Also, I was reading some more about the deal: apparently the city is not passing on its debt for the network to Google. So Google gets to waltz in and take over an existing fiber network, pay for some core upgrades and possibly expansion and can walk away when the contract is up (7 years).
This puts another place on my list of "Places where it would be acceptable to move to". In addition to the Google fiber, most of my cool extended family lives around there.
I have got to think it has more to do with the network that is already in place than the location.
Probably. Provo isn't exactly a technological backwater. Some older, but major (in their day) companies were based there such as Novell and Wordperfect. They probably still have a decent technological infrastructure there as a result.
I don't just mean infrastructure generally, I mean that the city of Provo has been building a fiber to the home network for years. Every house in the city is not hooked up to it - about 1/3 of residents are connected.
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http://www.freeutopia.org/2013/04/17/i-was-wrong-about-google-fiber-but-this-isnt-a-golden-deal-for-the-city-either/