Good news for anyone wishing the $70 a month 1 Gbps Google Fiber broadband service would come to their town: Early signs indicate that Google Fiber could become a significant nationwide broadband competitor, according to Wall Street equities research firm Sanford Bernstein.

On Tuesday, analysts Carlos Kirjner and Peter Paskhaver published results from a door-to-door survey of Google's first Fiber customers in Kansas City, which showed that Google could get 50 percent market penetration of its 1 Gbps broadband service in the next three to five years. Google Fiber's broadband service is 50 to 100 times faster than the average broadband customer is getting today for only $70 a month.

Based on early success in Kansas City, these analysts believe that Google could expand its service to pass some 30 million homes during the next several years, making it a serious competitor to existing cable operators and telephone company broadband.

To put this in perspective Verizon Communications has passed just over 15 million homes with its Fios all fiber network, which it began building in 2005. And its penetration rate as of the first quarter of 2014 was about 35 percent for its Fios TV service and 39.7 percent for its Fios broadband service.

"We think there is a non-trivial chance that Google could build Google Fiber into a profitable competitor to cable and telephone companies," the report says. "We don't think Google Fiber is an experiment, a regulatory ploy, or just a bluff to keep incumbents in check or get them to upgrade their networks. We believe the potential to build a large, profitable business is one of the main motivations for Google."

What this could mean for broadband customers around the country is that more competition may finally be on the horizon. And if incumbents respond as they've done in Austin, Texas, consumers could be looking at faster speeds at lower prices.

A week after Google announced Google Fiber was coming to Austin, AT&T announced its plans to build an all-fiber network in Austin. Even though the company has said it already planned to build this network in Austin, AT&T's speeds and pricing mirrored Google's in Kansas City: 1 Gbps uploads and downloads for $70 a month. Time Warner Cable also raised speeds in the Austin market to 300 Mbps. And regional cable operator Grande Communications started offering a 1 Gbps service for $65 a month.

Google's ambitions

A year ago, the head of Google Fiber Milo Medin told a crowd at a fiber-to-the-home conference in Kansas City that Google intended to build a profitable business out of Google Fiber. Since then the company has announced plans to deploy the network in Austin, Texas and Provo, Utah. It also said earlier this year that it is looking to expand into 34 cities in 9 metro regions. So far it's only offering service in Provo and Kansas City.

Up to this point, it's been difficult to gauge Google's success thus far in its first Google Fiber deployment in Kansas City. The company launched the service in the fall of 2012, but so far has not provided any information about how many customers are actually signing up for the service.

That's why the Sanford Bernstein analysts decided to commission their own door-to-door survey of about 350 residents in the first few neighborhoods where Google Fiber was built to find out exactly how well the service is selling.

The hallmark of Google's approach is that it divides cities into so-called "fiberhoods." And then it requires residents of those "fiberhoods" to commit to signing up for the service before it even agrees to build the network in that neighborhood.

Once communities reach a certain threshold, Google then begins deployment. Residents of those communities can only get the service during the few weeks that Google is deploying the service in their neighborhoods. If someone misses the chance to sign-up for Google Fiber during the fiberhood "rally," they'll have to wait until Google comes back around to their neighborhood.

Some critics say that Google is cherry-picking wealthier neighborhoods for the service. But even though the Sanford Bernstein analysts found higher penetration rates among wealthier residents than lower income households, they said that Google has been giving all neighborhoods an equal chance to qualify for the service.

The initial numbers from the survey when it comes to market penetration are very promising. In the medium to high-income neighborhoods, Google Fiber is capturing about 75 percent of the homes passed with its Google Fiber service. In low-income neighborhoods, penetration rates are closer to 30 percent. The analysts concluded that Google Fiber has gained a significant foothold in its early Kansas City fiberhoods. And that consumers are highly satisfied with the service and would recommend it to others.

Based on this data, the analysts believe that Google Fiber is on track to reach or exceed penetration rates of 40 percent of homes passed with its double play offer, which includes TV service and the 1 Gbps broadband service for $120 a month and its 1Gbps only broadband offer, which costs $70 a month. They think another 10 percent of homes will take the free 5 Mbps service. (This service requires a $300 installment fee, which is paid over the first year and the free service is available for seven years.)

In three to five years, penetration rates in Kansas City could be as high as 50 percent for the paid services and between 10 percent and 15 percent for the free service, the Sanford Bernstein analysts said.

But the analysts admit there are significant hurdles to building out the network nationwide, such as an aggressive competitive response. As a result the analysts put the chances of Google expanding nationwide to 50/50. But unlike other firms on Wall Street, which have largely dismissed Google Fiber's chances of success, Kirjner and Paskhaver say they think Google has a "material" chance for success.

Even if incumbent providers like cable operators and phone companies respond to Google Fiber's offer with similar speeds and pricing, which they are doing in Austin, Texas, they say they're still confident that Google can remain profitable.

"Indeed, we believe it is possible that Google Fiber will remain economically feasible for a large portion of US households even if incumbents do upgrade their plants to match Google's offers and end state Google Fiber penetration plateaus instead at, say, 35 percent to 40 percent instead of 50 percent to 60 percent of households taking paid services."