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What I don't get is that the genie is out of the bottle now. Google fiber exists and the more areas they roll out to where the encumbamts only bump service after the fact only further demonstrates the point that they don't give a shit about servicing their customers, they care about charging them for speeds that don't improve until competition forces their hand.

Is their plan to literally sacrifice their reputation for a few short term profits?

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Sadly, you over-estimate the length of the memory of the masses. They forget very quickly, and will not consider "this company fucked me over for years" if the company currently offers them the best deal.

Sad fact.