These two telcos (the worst in the world most likely) base their entire business and offerings on providing high-speed internet of yesteryear. AT&T UVerse service is a step up from traditional ADSL with speeds up to 25Mbps (I get 19Mbps regularly and live about 2 miles from the CO). Telco execs have been quoted as saying "consumer just don't need higher speeds." And most probably do not, the niche consumers (probably the HNers) would love 1Gbps speeds for reasons unknown (perhaps to host their own in-house EC2/S3!) but the niche consumers are the 1% and telcos don't care about us.
The biggest problem with this concept of Gigabit internet in Los Angeles is who will pay the bill, which will most certainly exceed the estimate.
AT&T already has plenty of fiber running to the pole with copper to the household. There are tens of thousands of old buildings in LA that make it impossible or extremely difficult to run fiber to the home. Not to mention, a ton of landlords will simply not care to tear up their infrastructure even if it costs them nothing. There is a VERY serious disease people in LA have which is "We just don't care."
Additionally, the "free" access of 2Mbps - 5Mbps is redundant since these are quite frankly ancient speeds regardless of their price economics. So with that said, if you do a simple analysis of how many customers would actually pay for high-speed (>100Mbps) access vs. the "free hoarders" it would be dismal. And would never cover the costs of the roll out.
Finally, EVEN if the economics made sense, the telcos would simply fight it, create problems for potential bidders, collude enough to force bidders out and continue their shitty business.