Forget about routers, Google has designed+built their own 10gb ethernet switches: http://www.nyquistcapital.com/2007/11/16/googles-secret-10gb...
When I traceroute youtube the last host my ISP owns is actually named google-10ge.bredband2.net. My ISP peers with google by AS29518 SKYNET-AS to AS15169 GOOGLE.
You're right you don't need to own fiber to do peering. But google has a ton of lit and dark fiber. http://www.voip-news.com/feature/google-dark-fiber-050707/
Power is a major issue in datacentres here especially ones in large cities. I also wouldn't be surprised if Google use software routers instead of hardware beasts that cost as much as a house.