That shouldn't have happened. But the reason it happened is that the incumbent providers refused to improve their services. They had no incentive to do so -- at least from their short-term, profit-driven perspective. Deploying ultra-high-speed Internet service is very expensive, and it would take years before the companies would reap the rewards. When all your attention is focused on the next quarterly report, and how stockholders might respond to it, you do all you can to keep costs down. Before Google came to town, there was little competition in the market, so why bother upgrading? If consumers have little choice, they take what they can get.
Now Time Warner Cable and AT&T say they want a "level playing field," by which they mean "all the same perks Google got." That might be a fair claim, but coming as it does after years of offering crappy service, it's difficult to sympathize with it. There is a reason that thousands of cities competed with Kansas City to be the first to get Google's service: The services they had were inadequate.
Karl Bode of DSL Reports sums up the situation nicely:
Google Fiber exists because companies like AT&T and Time Warner Cable failed to provide the kind of connectivity consumers want; despite adequate resources. While it would be only fair for these companies to receive equal favoritism if they're willing to deploy comparable services, you can be fairly sure that both companies lawyers and lobbyists are trying to get the same perks Google's getting -- without having to deploy cutting edge symmetrical 1 Gbps services.