Funding, construction problems hit United Fiber & Data project

In February 2013, Think Loud Development unveiled a $189 million plan to build a high-speed data network from Manhattan, N.Y. to Ashburn, Va.

The company, founded by three members of the multiplatinum-selling band Live, said it would build data centers in York, Reading, Allentown and Lancaster, which would add 400 jobs and $2 billion in state tax revenue.

At the company's launch event, it said it was preparing utility poles in New York and New Jersey and would break ground on the data centers in 2014. Later, a Think Loud official said 210 York St., York, the building that houses Think Loud Development, a music studio and YRK Magazine, would also become the headquarters for their fledgling telecommunications startup, called United Fiber & Data. With a detailed business plan, Think Loud was approved for $7 million in state economic development grants to renovate 210 York St. and prepare nearby properties for the data center building.

However, United Fiber & Data says construction and funding issues have delayed the fiber-optics plan. The company was involved in $1.98 million in recent civil claims. Data center projects in Reading and Lancaster have been canceled, and none of the proposed data center locations have been built. The state grant money remains untouched. The 400 jobs have yet to be created, and of the 367-mile fiber-optics line, only about 20 miles have been built, the company's lawyer said.

Andrew Paxton, an attorney who represents United Fiber & Data, said the project is still moving forward, but the timeline has changed, with fiber-optic line construction planned for the first quarter of 2016. In addition, UFD recently said it plans to create a high-speed internet community in York.

“It took a lot longer than they anticipated to get to this point," Paxton said. "As in any startup where you have folks to a new industry, you might be a little overly ambitious as to what you can deliver."

Product undelivered

One of United Fiber & Data's early customers, PEG Bandwidth, said in a recent York County civil filing that United Fiber & Data never delivered on its end of a deal to provide fiber-optic line.

A January 2013 agreement between the two companies, included in the filing, said that the Bala Cynwyd, Pa.-based PEG Bandwidth paid United Fiber & Data $1.1 million for the right to use a portion of the line.

Paxton said delays related to construction, funding and permits prevented United Fiber & Data from building the fiber-optic line on schedule.

"It was not delivered based on the initial dates in the agreement," Paxton said.

Civil records show that the lawsuit was settled with undisclosed terms on Nov. 5, and Paxton emphasized that PEG is still a customer on United Fiber & Data's Manhattan data network. Officials from PEG Bandwidth declined to comment.

Lease unpaid

To connect the existing Manhattan loop to the next portion of the proposed network, United Fiber & Data needs to get across the Hudson River, which separates New York and New Jersey.

However, an $826,290 civil claim involving United Fiber & Data and a New Jersey-based company, Hudson River Crossing, is preventing United Fiber & Data from taking that step.

John Cali, a partner at Hudson River Crossing, said his company owns a steel encasement tube that runs under the Hudson River. His company leases space in the tube to telecommunications companies, which run fiber-optic line through it.

Cali said United Fiber & Data signed an agreement to rent space in the tube in 2013. However, United Fiber & Data failed to make its payments.

"Our agreement basically states they have to pay us and then they can blow their fiber through," Cali said. "Because they're in arrears, they have to catch up first."

Paxton said the debt is the result of a misunderstanding between the two companies. United Fiber & Data believed it wouldn't have to make payments until after it installed the line.

Cali said United Fiber & Data has started making payments, and he is optimistic that it will pay the remainder of the debt.

Reading data center canceled 

In March 2013, Think Loud Development revealed the Reading portion of its business, which was poised to add 100 technology jobs to the city in Berks County. Think Loud bought a dilapidated 320,000-square-foot building for $1 million. United Fiber & Data bought a 4.5-acre parcel of land for $100,000.

Berks County records show that in March, the Reading Buttonwood Gateway Group reclaimed possession of that land because United Fiber & Data didn't present its development plans in accordance with contractual requirements.

Think Loud's property was also returned to the previous owner, Alan Shuman, after it failed to make its mortgage interest payments, Berks County documents show.

Shuman said he'd worked out an owner financing agreement with Think Loud. In October or November of 2014, Shuman said, Think Loud began to miss its monthly payments of approximately $7,250. Shuman said that rather than filing for foreclosure, he and Think Loud agreed to file a deed in lieu of foreclosure, transferring ownership back to him.

Paxton said the "timing didn't work" with Reading, and at this time United Fiber & Data has no plans to build a data center there. Officials from Reading Buttonwood Gateway Group were unavailable for comment.

Project status

Though the company has hit its share of hurdles, Paxton said United Fiber & Data remains committed to the project.

In fact, the company recently launched a new plan called the "Gigabit Initiative" which garnered $1.5 million in state grant approval. The initiative aims to provide the kind of commercial-grade internet speeds that could attract businesses and add jobs, the company has said.

As for the current job count? Paxton said he didn't know how many people United Fiber & Data employed, but he believed most of those people were based in York, with a few salespeople in New York as well.

Gerry Christensen, an analyst for TeleCom Engine, a telecommunications industry publication, said startups like United Fiber & Data are somewhat rare. The reason for that, Christensen said, is that they face tough competition from large, established companies such as Level 3 Communications or Google.

Christensen said the success of a company such as United Fiber & Data will depend on whether it finds a niche in the market where it could compete on price. For example, Christensen said it's possible the company has discovered a hidden demand among large companies or communication service providers somewhere along the planned 367-mile route.

Cali, at Hudson River Crossing, said the data line still has the potential to be a great asset for the industry -- if United Fiber & Data can complete it.

"In terms of our leases, I haven't seen the problems we've encountered with them," Cali said. "However, in terms of a start-up and a new company, they're the most ambitious that we've seen. So, risk-reward. If they're successful, it'll be a great thing. If not, it won't be."

Timeline

Aug. 1, 2011: Think Loud Development files as a corporation with the Pennsylvania Department of State. The company lists its headquarters as 210 York St., York, suite 100.

Oct. 27, 2011: In Reading, Berks County, Pennsylvania, Think Loud buys the Reading Outlet Center Building No. 1 from developer Alan Shuman for $1 million. 

Dec. 22, 2011: Operating as "120 York Llc.," Live band-members purchase 210 E. York St., in York from area developer Themi Sacarellos for $164,000.

Jan. 25, 2012: United Fiber & Data files as a corporation with the Pennsylvania Department of State. The company lists 210 York St., Suite 200, York, as its headquarters.

Sept. 25, 2012: United Fiber & Data buys a 4.47-acre parcel of land in Reading for $100,000 from Reading Buttonwood Gateway Group, owned by Albert Boscov. The purchase includes a provision that United Fiber & Data must file land development plans within a year or return the property to the developer. 

Jan. 22, 2013: PEG Bandwidth pre-pays United Fiber & Data $1.1 million as part of a contract that will allow PEG, a telecommunications service provider, to access United Fiber & Data's fiber-optics line once it is built.  

February 2013: Think Loud announces a $29 million plan to build the 367-mile fiber-optic line from New York City to Ashburn, Virginia along with plans to build four "fortified data centers" in York, Reading, Allentown and Lancaster, each at a cost of $40 million. A UFD official says the project will bring more than 350 jobs to the state, including 100 jobs in York, with an average salary of $75,000. 

April 2014: The Reading Eagle reports that United Fiber & Data CEO Bill Hynes says three data center projects should break ground in 2014 in York, Allentown and Reading. 

July 2014: Think Loud Development is awarded $5 million in state economic initiative funds for a project to build the United Fiber & Data headquarters and data center at 210 York St., York. Later the company is granted an additional $2 million for related work. To date, the corporation has not accepted any of those funds.

Jan. 15, 2015: After failing to pay mortgage interest payments on Reading Outlet Center Building No. 1., Think Loud signs over the deed to the property to the previous owner, Alan Shuman. 

April 16, 2015: Market Halsey Urban Renewal sues United Fiber & Data for $128,000, saying it defaulted on monthly rent payments for a proposed telecommunications hub. The two companies settle the claim with undisclosed terms. 

Aug. 28, 2015: Hudson River Crossing files court papers indicating that United Federal Data of New Jersey, operating at 210 York St. in York, owes $826,290 for failing to pay its lease agreement on tunnel space under the Hudson River. Both parties say that UFD has begun making payments.

October 2015: United Fiber & Data is awarded a $1.5 million grant from the state Department of Community and Economic Development's Broadband Outreach & Aggregation Fund for a new project, called the "Gigabit Initiative," which the company said will attract businesses and bring jobs to York by providing high-speed internet. To date, United Fiber & Data has not accepted any of the funds.

Oct. 9, 2015: PEG Bandwidth files a confession of judgment to recoup its $1.1 million prepayment, as well as related expenses, because United Fiber & Data didn't provide the services it promised. 

October 2015: Andrew Paxton, an attorney representing United Fiber & Data, says the fiber-optic network project is still on the table, with construction expected to begin in the spring of 2016.

Nov. 5, 2015: United Fiber & Data and PEG Bandwidth settle the $1.16 million PEG Bandwidth civil action with undisclosed terms.