Earlier quoted context omitted.
It would go against their strategy. By wiring up all the GF-friendly cities first, people living in GF-unfriendly cities start asking "why can't we have that, too?" Thus ratcheting up pressure on the local political systems.
This is something that works in theory, but not real life. Internet is becoming a utility, and most people only ever have experienced one utility in their life. People in the SF Bay Area choose between AT&T DSL and Comcast cable internet - two of the WORST providers, ever. Verizon FiOS eats both their lunches, yet, nobody rabble rouses to ask for fiber in that area. If people in Silicon Valley won't even pressure the…
That said, I'd definitely be happy to 'cut the cable' with Google Fiber in Palo Alto. There's already a bunch of dark fiber spanning the city, Google Fiber is already active in adjacent Stanford property, the residents are (in general) willing to pay for quality service, and the city is not so large as to make the project untenable.
Of course, Palo Alto has a long history of community / municipal connectivity projects with mixed success, and a notoriously-fractious decision making process, so nobody here is holding their breath...