Ladies and gentlemen, thank you for standing by, and welcome to Charter's Q1 2020 Investor Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require further assistance, please press star 0. I'd now like to hand the conference over to your speaker today, Stefan Anninger. Please go ahead.
Good morning, welcome to Charter's Q1 2020 Investor Call. The presentation that accompanies this call can be found on our website, ir.charter.com, under the Financial Information section. Before we proceed, I would like to remind you that there are a number of risk factors and other cautionary statements contained in our SEC filings, including our most recent 10-K and also our 10-Q filed this morning. We will not review those risk factors and other cautionary statements on this call. We encourage you to read them carefully. Various remarks that we make on this call concerning expectations, predictions, plans, and prospects constitute forward-looking statements. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ from historical or anticipated results.
Any forward-looking statements reflect management's current view only, and Charter undertakes no obligation to revise or update such statements or to make additional forward-looking statements in the future. During the course of today's call, we will be referring to non-GAAP measures as defined and reconciled in our earnings materials. These non-GAAP measures, as defined by Charter, may not be comparable to measures with similar titles used by other companies. Please also note that all growth rates noted on this call and in the presentation are calculated on a year-over-year basis unless otherwise specified. On today's call, we have Tom Rutledge, Chairman and CEO, and Christopher Winfrey, our CFO. With that, let's turn the call over to Tom.
Thank you, Stefan. First, on behalf of all of us at Charter, let me express our concerns for those who've been impacted by the COVID-19 crisis in the local communities we serve as we endure together an extremely serious health, social, and economic crisis. The hard work and dedication of Charter's 95,000 employees has been remarkable. We're all proud of how we're serving our customers at this time. Charter's employees are in trucks, in the field, call centers, dispatch network operation centers, their homes, and retail stores, where we provide customer equipment and numerous support functions that enable our company to service our customers. We've remained focused on our customers and communities, and we've been able to deliver our connectivity services without interruption to our customers across the country.
We know our role as a provider of communication services and the importance of keeping connectivity services fully functioning for both new and existing households and businesses, which enables social distancing, including remote working, distance learning, telehealth services, and family communications. In mid-March, as part of our effort to Keep Americans Connected during this crisis, we pledged to do a number of things. We committed to offer Spectrum Internet for free for 60 days to households with students or educators who do not already have a Spectrum Internet subscription. We recently announced that we are extending the availability of this offer through June 30th. As of March 31st, we added approximately 120,000 customers connected under this offer, with many more installed in April.
By the end of the school year, we expect that this offer will have helped approximately 400,000 students and teachers and their families continue schooling through remote learning. We also committed to suspend collection activities and not terminate service for residential or small or medium business customers who are experiencing COVID-19 related economic challenges. We also extended the availability of this offer to June 30th. Additionally, we've opened our Wi-Fi hotspots across our footprint for public use, and we prioritized over 1,000 requests from government, healthcare, and educational institutions for new fiber connections, bandwidth upgrades, and new services. That includes major hospital groups and the two U.S. naval hospitals in N.Y. and L.A. Spectrum News has opened its websites to ensure people have access to high-quality local news and information.
We've also donated significant airtime to run public service announcements to our full footprint of 16 million video subscribers. Charter provides an essential service, we've been working to keep America connected, working and learning, while at the same time protecting our employees. We've instituted guidelines in our call centers that enhance social distancing between employees, including enabling a significant percentage of those employees for remote work. We've also altered our field operations protocol by aggressively moving to customer self-installation. While we continue to operate at nearly full capability, we're taking the necessary precautions to promote the safety of our employees. We're also providing our employees with outstanding benefits. We've implemented an additional two weeks of paid sick time for COVID-related illnesses or when we ask an employee to self-quarantine.
We've given every employee an additional 15 days of COVID-19 related flex time to address other COVID-related issues, including caring for children and dependents. In early April, we increased our wage for all hourly field operations and customer service call center employees by $1.50 per hour back to February. We also committed to raising our minimum wage for hourly workers to at least $20 an hour over the next two years. We're paying employees in parts of our business, like residential and SMBs direct sales, whose work has been put on hold. To reinforce our commitment to employees, we announced that for 60 days, no employee will be laid off or furloughed. We have a great business with employees committed to our mission, and that will ensure that we're able to excel through the eventual economic recovery.
We continue to perform well operationally, both through the end of the Q1 and now. In the Q1, we added 580,000 residential and SMB internet customers. We had a good quarter, driven by demand for our higher quality products. We also saw an increase in the number of residential and business customers upgrading their speeds. Our ability to provision the outsized demand we saw in the quarter has been a result of the investments that we have made over the last several years in our insourced and onshore high-quality workforce, significant systems integration and automation, our online and digital sales and self-service platforms, and our self-installation program. In fact, we accelerated the expansion of our customer self-installation from 55% of sales at the beginning of the quarter, to nearly 70% at the end of the quarter, to over 90% today.
Data usage and traffic on our network also grew significantly during the quarter. In March, residential data usage for internet-only customers was over 600 gigabytes per month, up over 20% since the Q4. Our customers are benefiting from a continually decreasing price per gigabit. Peak traffic levels remain well below maximum capability. Our network, as well as those of other cable operators in the U.S., have performed better than networks in other countries because of the significant investments we've made and continue to make in our plan, like the recent rollout of one gig everywhere. The pro-investment regulatory climate has made this possible. Over the coming years, we'll invest in our network as we build to lower density in rural communities and pursue our 10G plan, which provides a cost-efficient pathway for us to offer multi-gigabit speeds, lower latency, high compute services to consumers and businesses customers.
With our inside out strategy, we will continue to use and develop small wireless cells powered by our network together with our MVNO to connect customers in and beyond the home, delivering our throughput and economics for customers in fixed, nomadic, and mobile environments. Our strategy will be enhanced by the FCC recently freeing up 1,200 megahertz of 6 gigahertz spectrum for Wi-Fi. The FCC's action is a transformational step toward broadband in America. It was a bold move, and we look forward to making significant use of the spectrum. Moving back to Q1 results. We also performed well from a financial perspective during the quarter. We grew adjusted EBITDA by 8.4%, and combined with our lower cable capital expenditures, our Q1 free cash flow grew by over 100% year-over-year.
As we look forward, we would expect that demand for our residential broadband product will remain strong as people work and learn from home and need to stay connected. Broadly speaking, the health of our residential business will be impacted by what happens to unemployment and income, and how long, and the impact that such factors will have on customers' ability to pay for service in the coming months, including government support to consumers. Slowing household formation may also play a role in our ability to drive new customer growth by slowing activity for both new sales and also churn. We also recognize that the recent strength in video and wireline voice trends may be temporary due to lockdowns and reverse in an economic downturn. Our SMB business is more difficult. We serve approximately two million SMB customers, and many of those customers are currently closed, at least temporarily.
As a result, SMB customer growth and revenue growth will be lower than our previous expectations. It will likely take time for this part of our business to recover, but it will, and maybe with a faster growth rate than before the crisis. I expect our enterprise business to remain more stable than SMB. Enterprise customers are larger and most, but not all, will be able to withstand the recession more than smaller businesses that have less liquidity. Our expectations for enterprise customers and revenue growth have also been tempered, as enterprise customers with complex products are less likely to switch and grant installation access in this environment. Our advertising business is inherently local and primarily supported by small and medium businesses, which have been hurt in the crisis.
We still expect political advertising to be meaningful, which will help us, particularly in the back half of the year. Clearly our revenue growth rate will be less than what we anticipated. As service transactions and sales slow for the market as a whole and customer adoption of self-service accelerates, there are a number of operating cost improvements and capital expenditure delays that will help cash flow growth now and in the future. We also believe that on a relative basis, we're in a far better position than most companies, as the value and demand for our service is significant, and we're operating efficiently and serving our communities well as we always have in a crisis.
Chris will cover the potential impacts to our 2020 financials and reporting in more detail, but I want to be clear that while we don't know the depth and duration of the economic impacts of social distancing, we've pressure tested our business model, our liquidity, and balance sheet through various scenarios. Our analysis confirms what we have always believed, that we remain well-positioned. Overall, we fully expect to be in good shape over the long term, and we believe our business will continue to do very well, given the assets and products we have and the continued investment in those assets, our customers, and our employees. Before turning the call over to Chris, I'd like to thank Charter's employees for their hard work and dedication and diligence through this crisis.
They've been asked to go well above and beyond their regular duties, and they've delivered, easing the strain for millions of families. The positive feedback we've received from our customers is very gratifying, and we continue to treat our customers with respect, compassion, and support. We continue to deliver great products and services. We'll come out stronger on the other side of this crisis. We still have a lot of work in front of us, but I'm heartened by how we've risen to the challenge and know that we'll continue to deliver for our customers and for America regardless of what comes our way. I would also like to send my regards and best wishes to all of those listening to this call. May you and your families remain safe and healthy. Now I'll turn the call over to Chris.
Thanks, Tom. Our Q1 results were strong and reflect where we were heading as a company before the COVID-19 crisis started here in the U.S. Our residential customer relationship net additions increased versus the prior year in each month of the Q1, and we were driving increasingly efficient operations given our customer-friendly operating strategy and growing our free cash flow quickly. Residential revenue grew by 4.2% in the quarter, primarily driven by accelerating relationship growth and similar PSU, bundle, and video mix trends we've been seeing over several quarters. SMB revenue grew by 5.4%. Enterprise revenue declined by 3.2% year over year, driven by the sale of Navisite and by continued pressure from the wholesale side of the business. Excluding both cell site backhaul and Navisite, enterprise grew by 6.9%. Q1 advertising revenue grew by 5.7%, driven by political.
In the month of March, non-political advertising revenue declined by 18.7% year-over-year, primarily due to COVID-19 related softness, including the abrupt postponement of sporting events. Mobile revenue totaled $258 million, with $131 million of that being device revenue. In total, consolidated Q1 revenue was up 4.8% year-over-year. Moving to operating expenses. In the Q1, total operating expenses grew by $191 million, or 2.7% year-over-year. Cable operating expenses, excluding mobile, grew by 1.1% year-over-year, or 1.7% excluding Navisite. That's despite faster relationship and revenue growth. Programming increased 0.9% year-over-year, reflecting the same rate, volume, and mix considerations that we've seen and talked about in prior quarters. We also had over $20 million in non-recurring programming benefits this quarter.
Regulatory connectivity and produced content expenses decreased by 1.7% year-over-year, driven by lower regulatory fees and a $20 million benefit from the timing of sports rights payments. Cost to service customers increased by 1.4% year-over-year compared to 4.5% customer relationship growth. That expense includes roughly $30 million for recently accelerated hourly wage increases and COVID-19 benefits, as well as $25 million of incremental estimated bad debt for COVID impacts as of March 31st. Excluding bad debt expense in both years, Q1 cost to service customers declined by 0.7%. We continue to meaningfully lower our per-relationship service cost. Cable marketing expenses increased by 4.2% year-over-year, driven by higher labor costs and commissions. Mobile expenses totaled $374 million, and they were comprised of mobile device costs tied to device revenue, customer acquisition and MVNO usage costs, and operating expenses.
In total, we grew adjusted EBITDA by 8.4% in the quarter when including our mobile EBITDA loss of $116 million. Cable adjusted EBITDA grew by 8.1%. We generated $396 million in net income attributable to Charter shareholders in the Q1, and capital expenditures totaled $1.5 billion. We generated $1.4 billion of consolidated free cash flow. Excluding our investment in mobile, we generated $1.6 billion of cable free cash, up about $700 million versus last year's Q1. During the quarter, we repurchased 5.2 million Charter shares and Charter holding common units totaling about $2.6 billion at an average price of $490 per share. Let me briefly turn to our customer results before addressing our business outlook in more detail.
Including the impact of COVID-19 related customer offers and programs, we grew total residential and SMB customer relationships by close to 1.3 million over the last 12 months, or by 4.5%, and by 486,000 relationships in the Q1. Including residential and SMB, we grew our internet customers by 582,000 in the quarter and by close to 1.6 million or 6.1% over the last 12 months. Video declined by 70,000 in the quarter, better than last year's Q1 decline of 145,000. Wireline voice declined by 65,000. It was also better than last year's Q1 decline of 99,000. Through February, total customer relationships, internet, and video net additions were all better year-over-year. Mobile net additions had continued to accelerate. By mid-March, due to increased social distancing practices and shelter in place orders throughout the country, demand increased significantly for our products.
We temporarily yielded less mobile as sales call time focused on self-installation instructions and our mobile retail channel has been partially impacted. Also beginning in mid-March, we introduced three COVID-19 related offers and programs for our customers. In today's materials, we've provided an addendum showing customer counts for each of these. I expect we'll continue to report this addendum for a couple of quarters to provide investors with transparency on the impact of our COVID-19 related offers and programs. The first of three offers available for customers is our 60-day free internet offer for new internet customers with students or educators in the household. We launched the offer in mid-March, and it accounted for 119,000 of our 582,000 total internet net additions in the quarter.
At the end of March, we still had a large number of pending connects, and customers on the offer continued to grow at a fast pace in April. Interestingly and uniquely, about 50% of the customers who participated in the offer in March chose to order additional products with immediate billing. The vast majority of these customers are taking our flagship internet product at 200 megabits per second or 100 megabits per second, and a small minority subscribed to our low-income offer or our Ultra and one gigabit premium offerings. The profile of these customers is very similar to the profile of our typical internet customer acquisition stream.
While some of these customers will no longer subscribe to some of these services after 60 days, the payment trends for customers who took video and phone at the same time already indicate to us that most of these customers will remain. The second offer or customer category reflects customers under our 60-day Keep Americans Connected Pledge to the FCC. These are customers who have indicated an inability to pay for the service for COVID-19 related reasons. As of March 31st, 140,000 residential customers were in this program, many who would have been in a collection cycle in normal circumstances, and only 1,000 of which had passed the point in the collection cycle where we would have normally disconnected their service at March 31st.
To give this some color, approximately 25% of the 140,000 customers today have balances which are fully current, and in total, nearly 50% have made partial or full payments since entering into this protection program. Approximately 65,000 of those customers now have past due balances beyond the point of normal disconnections ending at the end of April. The number of customers requesting disconnection protection has continued to grow in April, and we expect it to grow further through the rest of Q2. We intend to work with these COVID-19 impacted customers to get them back in a good payment status with the objective of fully continuing their service with us. The final category of customers we've isolated in our addendum are SMB customers who've requested a seasonal suspension of service or temporary downgrade of a line of service while their operations are closed or diminished.
Certain restaurants, bars, and hotels are good examples where we've reduced service to a minimum level and reduced the monthly bill until these customers fully reopen. We also expect this category to grow in Q2. What does all this mean beyond temporary ARPU dislocation and backend subscriber risk? First, even if you exclude the impact of these offers and programs from our Q1 results, residential customer relationships and internet grew at a faster pace year-over-year. That remains our long-term opportunity. Second, customers may move in, out, or between these categories over time as the economy contracts and ultimately expands. Our issue is not demand for our products. It'll be our customer's ability to pay and how we help them in that respect over time.
Until we have a better sense for the depth and the duration of the COVID-19 crisis and its economic impact, it's difficult for us to project what the help we offer our customers will look like. However, we think we could end up creating more value over the long term as we continue to treat our customers and our employees well. With that in mind, I'd like to expand on Tom's remarks as it relates to our business outlook and where we're likely to see pressure and opportunities over the coming months and quarters, depending how and when the economy re-accelerates. For our residential and mobile services, the quality and value of our products are clear and demand is high, with internet up in March significantly, even without the COVID-19 related offers. Video and phone also saw positive net adds in March, at least temporarily.
Looking forward, the risks are that household formation and growth will be impacted. The other issue will be customers' ability to pay, either via their wages or extended employment benefits under the CARES Act or other stimulus packages. If, how, and over what period of time we can get some customers to repay back balances when they're able to make payments again. There are all kinds of questions here about financial presentation, accounts receivables, revenue recognition, bad debt provision, and write-offs, which really reflected in Q2 and will work through in the coming months and quarters. We intend to provide our investors transparency as we go through a unique reporting exercise. When the economy begins to recover and assuming our customers can pay us, I expect our residential business will be in good shape.
SMB represented $3.9 billion of revenue for us last year, or 8.5% of our total revenue. In the back half of March, we began to see softness in our SMB sales, where essentially our entire direct sales force has been on hold. That channel is a larger contributor to SMB sales than it is to residential. We estimate that less than 20% of our SMB customers are restaurants, hotels, bars, theaters, and the like, many of which will struggle in this downturn. We're working with all of our SMB customers in this difficult time and believe we can return to growth in an economic recovery. We expect the retail base for Enterprise to be more stable. In March and April, we saw significant demand from healthcare and government segments to upgrade and add new services, which has taken the place of new connects in other areas.
We expect new sales to taper off and retail services growth in the short term for enterprise will be moderated by customers' willingness to make changes, particularly for physical services in this climate. We'll have an offsetting benefit in churn, but absent higher new sales, it'll be difficult to grow retail enterprise significantly in the short term. For Spectrum Reach, our advertising group, the Q2 will be challenging. March revenue was below our expectations by more than $30 million due to cancellations, and the April variance was more than double that amount. We're proactively working with clients to move their advertising spend from sports events to reach their audiences in different places or to move out their orders generally. We believe there's an opportunity to both recover and earn more advertising business once the economy picks back up.
We still expect significant political spend in the back half of this year, the full year impact won't be as dramatic on a year-over-year basis. Those are the short-term revenue challenges and the long-term opportunities. What are the potential offsets in our cost structure? Churn across all of our subscription services was already declining significantly before the crisis. Mover churn and voluntary churn is declining even more now, new sales will also decline. All of which says that we expect a much lower level of service calls, truck rolls, installations, commissions, and labor-related activity. That applies to residential, SMB, and enterprise. As Tom mentioned, self-installation is now over 90%, up from 55% in the first part of the Q1. With utilization of digital self-care up over 30%, our integration investments in our self-service platforms and portals are paying off.
The current crisis has accelerated customers' adoption curve for digital service, and we don't think it goes back to where it was. Outside of bad debt and some accelerated wage increases to our frontline, our cost of service will decrease with less activity. Employee turnover will decline and hiring activity is likely to slow across the business, which has direct cost and tenure benefits, and we think any remaining EBITDA shortfall relative to our plans would likely be offset by CapEx that will be lower than previously expected due to higher self-installation, lower churn, the timing of scalable infrastructure spend, and potential construction delays. That's how we believe the model will flex. What we don't know is the depth and duration of a recession, but we like our business model, how we manage the business across various climates, and we believe we can grow long term.
It's probably a good transition to the balance sheet and our liquidity profile. As Tom mentioned, we have done a lot of modeling to stress test our balance sheet under various economic scenarios. We finished the quarter with $2.9 billion of cash and $4.7 billion of availability under our revolver. In early March, at the beginning of the COVID-19 crisis, we priced a long-dated high-yield financing at an all-time low coupon. On April 17th, we issued $3 billion of our tightest coupons ever for 10 and 30-year investment-grade tranches. Pro forma for those investment-grade bonds and recently called debt, at March 31st, we had $8.4 billion of total available liquidity. As of the end of the Q1, our net debt to last 12-month adjusted EBITDA was 4.4 times, or 4.3 times if you look at cable only. In that respect, we've already been de-leveraging slightly.
Pro forma for our recent financing activities, our weighted average cost of debt is only 4.9%, and the weighted average life of our debt is 12.2 years, with more than 90% of our debt maturing beyond 2022. We have a schedule on slide 13 of today's presentation, which puts our maturity profile in perspective relative to last year's cable EBITDA. Together with our significant liquidity and positive free cash flow, we remain in a very good position to finance our operations organically, as well as through the capital markets, which remain open to Charter. As it relates to our stock repurchases, we've been under a 10b5-1 plan, which was entered into right before the COVID-19 crisis began here in the U.S. Due to lower share prices in March, we purchased more of the targeted volume in March than April.
We have never provided guidance on buybacks because we think it can encourage bad decision-making relative to better alternative uses of cash over time. We're going to be thoughtful and responsive to where we think the economy's going, our stock price, our liquidity, and any organic or inorganic opportunities which may arise. While the current environment does suggest caution in the short term, we are not modifying our four to four and a half times leverage target range today, and we'll continue to monitor the economic climate and the interest rate market in regularly evaluating our leverage target. We know that we have a high-quality, resilient asset with dedicated employees across our local communities, and we've invested significantly in our network and people over the years.
There's high demand for our product across every part of our footprint, in both homes and businesses, in good times and bad, which is why we continue to aggressively build out more broadband passings and ensure that our network is well invested, ready, and working for future opportunities. Our goal is to stay focused on what we do well and execute a proven operating strategy that works for customers and employees across various economic and regulatory climates to create shareholder value over the long term. Operator, we're now ready for questions.
At this time, I'd like to remind everyone, in order to ask a question, please press star followed by the number one on your telephone keypad. We'll pause for a moment while we compile the Q&A roster. Our first question comes from the line of Craig Moffett with MoffettNathanson. Go ahead, please. Your line is open.
Hi. Thank you. I want to sort of take a bigger picture question for a moment. Just given the strength of your results and the enviable position that you find yourself in of having a business that is relatively resilient in this kind of a market, what are the things that you can do that sort of take advantage of the dislocation, whether it's more edge outs, potentially acquisitions, a faster move in acquiring Spectrum and trying to take some share in wireless. How do you think about?
Using this dislocation as a way to make your business stronger when we come out the other side of this disruption.
Craig, obviously we think about that every day. We have some cash on hand to be opportunistic if there is an opportunity that would require investment. The biggest opportunity we see is to continue doing what we're doing, and just doing it better and well, and being able to execute better and well, and continue to succeed in the marketplace. Our biggest opportunity as a company is to continue to create customer relationships. We think that we have a great set of assets that we've put together and invested in properly. Therefore, we have advantages in terms of the products that we can sell relative to others at the moment, and we have a high quality, high skilled workforce that's capable of generating and operating activity. That's our biggest direct upside. We think we can continue to operate well and execute well going forward.
To the extent that we're better at that than others, we create more value more quickly.
Thank you. That's helpful. If I could just ask another maybe slightly more prosaic question. Given all the attention being paid to sports right now, can you just talk about the way you'd like to see the issue of sports payments to RSNs and national sports networks work out, and the pressure to rebate to customers and that sort of thing?
Yeah. Well, look, we've talked for years about the reality of programming costs and how sports drives the bulk of the programming cost. If you look at our average cost of programming per customer, in the high $60 range on average, that's the wholesale cost that we're paying per customer. My guess is that if sports was not involved in the negotiations for the creation of that cost, that it would be less than half of what it is. Sports is the major driver in the cost of content, and obviously, it makes the whole product difficult to sell because of the cost that consumers have to pay, and the effect that just simply, it's a very expensive product and people have a hard time paying for it.
The reality is that we would love to pass through the sports programming cost back to the customer if it isn't paid or if the events don't occur. There's still a big question about whether the games are going to be played, and if they are played, most likely, the cost will not be rebated to the customer. At this point in time, we have a structure in the industry in how we pay for content. It's all bundled together and tied together contractually, and we have very little control over it directly. We'd love to see our customers relieved if they can be. Ultimately, it's the athletes who are getting the money, and at some point somebody has to give up their money and give it back to the customer. That hasn't happened yet.
Thanks, Tom.
Bye.
Thanks, Craig. James, we'll take our next question, please.
Our next question comes from the line of Vijay Jayant with Evercore ISI. Go ahead, please. Your line is open.
Thanks. Tom, given that you obviously have exposure across the country, can you just talk about how the markets are different for areas like New York and California, where lockdown started early and compared to the other markets? Are you sort of seeing any sort of green shoots as some of these states start opening up and any sort of change in direction of business? Just a simple question on the network. Obviously, it's highly resilient right now, but I'm assuming that from the work from home sort of orders right now, that the data transfer is becoming more symmetrical and your upstream on your network is not conducive for that kind of thing, I think. Can you sort of help us think about, is there any stress on the network from that side? What needs to be done if anything? Thanks.
Sure. Well, in terms of variation by various parts of the country, obviously there are reopenings occurring and we're preparing to operate differently in different parts of the country, depending on what the local regulatory climate is with regard to what's allowed from a business practice perspective. As an essential business, we've been operating the whole time. Obviously, we have to keep our business running. We've been running it under the tightest conditions that exist in terms of what we can do and how we have to take care of our employees and how we have to take care of our customers. As we begin to see places opening up, we're preparing to respond to the local markets individually and to project our capability locally.
I can't tell you that I can see, at this moment, any differences from one location to another in terms of New York City's a unique place, but it's unique in every way, always is. Broadly speaking, we've been locked down everywhere up till now.
We're growing market share everywhere.
We are growing consistently everywhere. In terms of the future of the network and the load on it, we've been able to handle the very quick change in demand. One interesting thing, the demand has gone up a lot in terms of network utilization, but it's also spread out. You build your network to maximum peak utilization and not total utilization. It's the Mother's Day call effect, from a network build perspective. You build for the one day a year when you need every bit of your network. The network has been built, and it's absorbed what we think of as a year's worth of augmentation in a few weeks. The general trend that we now see in a few weeks has been going on for quite a long time, and we expect it to continue.
We have a pathway, in terms of our assets, to developing what we think the future of communications is, including an upstream capability as upstream utilization continues to grow. That's what we call 10G. It's also called DOCSIS 4.0, in terms of the way we describe it from a specifications perspective. We're still rapidly moving down the path of augmenting our networks in smart ways, in capitally efficient ways, to continue to allow capacity to grow and to create new products that are hard to even envision. We think that we're very well positioned to do that over the long term. It's going to require continued investment, but a proportional investment that's significantly less than any sort of brand-new build.
We think we're in a great position to make those investments and to realize the benefits of them and to create the new products that are going to come from them. We don't have an immediate upstream problem, and we don't have a downstream problem. We have opportunities in both places in the long run.
Thanks so much.
Thanks, Vijay. James, we'll take our next question, please.
Our next question comes from the line of Mike McCormack from Guggenheim Partners. Go ahead, please. Your line is open.
Hey, guys. Thanks. Tom, maybe just a quick question on Spectrum. I know you mentioned the FCC's move recently. Does that change your appetite in any way for the CBRS Spectrum auction later this year? Thinking about sports rights, I know you touched on it briefly, but what are your thoughts just more generally on the value of sports rights coming out of all this? Thanks.
Well, if I understand your question, are you saying did the FCC's six gigahertz Wi-Fi spectrum affect our valuation of CBRS? The answer is no. They're really separate notions. I look at the six gigahertz spectrum as inside house type spectrum. All of our products are delivered wirelessly, so the real issue is mobility versus stationary or sedentary behavior. The six gigahertz spectrum is really for in-house high capacity use for a whole new set of products that will come along. The CBRS spectrum really allows for more efficient use of the mobile platform, at least the way we look at it. Although it could be used indoors as well, and it can be used indoors both for mobile service in enterprise environments and externally. We see them as separate notions and separate values, and one hasn't affected the other in our view.
Regarding sports rights, everybody misses sports, and it obviously is an extremely valuable product, and it's the glue that holds the bundle together. Assuming that sports come back and that leagues generally play, the secular trends that are going on shouldn't change, in my view. The same forces will exist going forward that existed before the crisis. Absent a complete collapse of the sports business, I don't see a major change.
Thanks, Tom.
Thanks, Mike. We'll take our next question, James, please.
Our next question comes from the line of Michael Rollins with Citi. Go ahead, please. Your line is open.
Thanks, and good morning. I was curious if you could frame some of the scenarios that you were running for your SMB customers in trying to think through the exposure and how you frame the bad debt reserves in the quarter? Thanks.
Sure.
Yeah, go ahead.
Mike, on the SMB, I just put it a little bit in perspective. It's 8.5% of our revenue, and so you can get to some pretty wicked scenarios and it still doesn't have that material of an impact to the company, certainly when you're talking about the third of your balance sheet perspective. It has an impact on the revenue growth rate for the entire company. I think, given some of the stats that I was providing inside the prepared remarks, the idea was that people could take their own view of how bad, in particular, that segment of bars, restaurants, and theaters could be hit and for how long, and that would give you some sensitivity of what the trough looks like.
We don't know any more than anybody else in terms of the depth and duration of a recession, but that's why we wanted to give some of those stats to give a framework for people to think about it. The first one was SMB.
How you frame the bad debt.
Bad debt. Well, look, every company's had to modify to a new GAAP standard, which requires you to estimate your bad debt reserves for the receivables that you have at a period of time as opposed to when they age. You've heard everybody talk about that this quarter. We're no different. We had, in total, between cable and mobile, about $30 million of additional bad debt as an estimate for what might not be payable on the accounts of receivables that existed at the time of close. In Q2, let me start maybe back with the first objective. Our goal through all of this is, A, to do well by the customer by providing good offers for remote education as well as for, in this case, Keep Americans Connected Pledge.
Our goal is also not going to be to quickly get into a collection environment and cut them off. Our goal is going to be to keep these customers. In the Q2, to the extent that we work with a customer to right-size their receivable, some of that could impact the revenue recognition inside of Q2, and some of that, for a financed portion that they may need to pay back over time, could impact our estimate for bad debt reserve. That'll apply for residential and SMB. When I mentioned in the prepared remarks that we're going to have a lot of technical accounting and reporting issues to deal with in Q2, it's true, but we're going to be focused on not the accounting outcome or how Q2 is going to look.
We're going to be focused on what's the right long-term outcome for the customers and for the company, and we'll make sure that the accounting does what's appropriate on the back end. I think there'll be a little bit of noise, and we'll make sure that we disclose any revenue impacts and any bad debt impacts in our Q2 reporting.
That's kind of an accounting explanation.
Yes.
The way I look at bad debt is, have you created customers and do you keep them, and do they pay you? If you create customers and they pay you, that's good. If you don't, you have a lot of bad debt. When I look at the customers that we're creating, they're taking our high-quality products in the residential space, and from a profile perspective, they look like the customers who we've always created. They're going to be affected by the macro climate, obviously, but we have products that we can sell to those customers that have value regardless of where they fall in the income range. We sell to very poor people, and we sell to very rich people, and we have a product mix that can work across the entire marketplace. I'm confident that we can create valuable customer relationships through time.
Even in the small business arena, we're still creating customers today. Even if you think about the restaurant business, which is closed, the vast majority of those customer relationships are still intact. They still want websites, and they may have takeout businesses or whatever, but even if a business is closed, it doesn't mean that they don't want to have a relationship with us.
Thank you.
Thanks, Mike. James, we'll take our next question.
Our next question comes from the line of Peter Supino with Bernstein. Go ahead, please. Your line is open.
Hey, thank you. When you all analyze the improvements in churn, what are the drivers of that other than the all-digital upgrade that we've talked about at length and the insourcing of customer service? I wonder if your performance in the legacy Charter territories continues to provide any helpful data to answer this question.
Before the impacts of COVID, our churn was coming down steadily.
Yep.
Everything we've done post-COVID has been consistent with the strategies that we had before in terms of having high-quality service, high-quality product, high-quality workers insourced in the United States, who are trained and capable of providing excellent service. If you do that, you have less activity. The ultimate value proposition that drives the cost to serve is activity. If your service is better and your products have longer lives, inherently you have less activity per dollar of revenue generated, which means that you have a higher margin or a lower cost to serve. Churn is one of the measurements of customer satisfaction. It's also a measure of mobility in the economy and other things of that nature. All of those things being held constant, if your churn rate is going down, it means your customer satisfaction is going up because your products are better.
That's been our objective in terms of managing the company, and it still is. The legacy Charter platform, churn was coming down, and legacy Time Warner platform and legacy Bright House platform, churn was coming down across all of those businesses. Cost to serve was coming down too, because of the self-installation models and all digital models in terms of digital buy flows that we created, allow for ease from a consumer perspective of dealing with us and less friction in the actual transaction because an appointment isn't necessary to keep for that process to occur. All of that creates less activity and higher satisfaction, which is a very virtuous cycle, in the sense that if you have less activity and you have less failure in your activities, meaning you have less service calls, you'll have less missed appointments.
You actually create more satisfaction, which even extends subscriber life even longer, which by itself reduces activity. That was the path we were on, and it's still, I believe, the path we're on. It's a little bit confused by the volume that we're currently under. We've had enormous uptake in activity in the last two months due to sales. Interestingly, we've created, in the last 60 days, 10,000 new broadband customers a day. 600,000 customers in 60 days. That's a lot of work. We've done that pretty seamlessly.
Thank you.
Thanks, Peter. Operator, we'll take our next question, please.
Our next question comes from the line of Jonathan Chaplin with New Street Research. Go ahead, please. Your line is open.
Thanks. Two quick ones if I may. Tom, for you mentioned that the importance of the sort of secular trends in sports haven't changed. I'm wondering if you can touch on some of the secular trends in the business that you think have changed, how the business is going to look different when we come out of the current environment. Chris, I think you said that non-programming costs were down year-over-year when you exclude the COVID impacts from wages and bad debt. Is that a trend that you would have expected to continue throughout the year, but for the impact of the pandemic? Should we annualize that $30 million and $25 million of COVID related impacts, or does it sort of flow differently as we go through the year? Thank you.
Jonathan, on secular change, I would say it this way. I don't know that they're permanently changed, but they're permanently advanced. Meaning, we took years of secular change and compressed it into a very short period of time, and we're not going to go back to the original trend line. We may have just moved way up the trend line. I think network utilization is one of those. I think customer self-serve is the other, and the cost to serve as a result of that. We were already fairly far down the road in the customer self-service model, and we were fortunate when we got hit with what we did and with the marketing tactics that we employed, that we were able to actually deal with it.
We had started the quarter in the 55% range, I think of self-installation, and we were about at 70% when everything changed, and we're over 90% now of self-installation. The fact that we were already at 70% allowed us to get to 90% with a fair degree of operational efficiency. We were prepared, fortunately, at that moment. I think that's a big change in the business going forward. I think people using Zoom and other kinds of two-way communications in a work-like environment in their homes is probably advanced by a number of years for the long term.
Jonathan, you talked about. Go ahead.
I was going to say, just to follow up on that, and this is probably directed at you, Chris, but going from 55% to 90%, what does that do for margins in a year, or maybe it's two years, when we get out of this environment? How much are margins structurally higher because of that?
Yeah, I don't want to get into a percentage margin discussion, but the cost of a self-installation is about a third of the cost of a professional install. The benefit of that inures to both OpEx and CapEx, depending on what type of installation it is. It's significant. Keep in mind that we were already at 55%. We would've been at 70% by the end of the quarter, absent the acceleration. Your second question was on non-programming expense. There's marketing, there's advertising expense, there's enterprise expenses in there. I prefer to think about cost to service customers, which is really the residential and SMB cost to provide network operations, field operations, and customer service operations, so call centers and billing. Just the bulk of our cost.
That cost, as I mentioned in the prepared remarks, absent, leaving aside just bad debt, was down year-over-year in gross dollars. It was down as a per relationship basis. I know I've cautioned in the past that what we're committed to is that per relationship cost to serve is going to continue to decline. I've been hesitant to say that the dollar cost to serve, excluding bad debt, would also decline on a gross basis. Clearly, it would've inside of Q1 year-over-year, and given that we do expect, once we get beyond April. April's been a high activity month. We think that sales transactions and move churn and all of the different service transactions will start to slow down. That could actually accelerate, excluding bad debt, the cost to serve decline year-over-year, certainly on a per relationship basis.
I think the trends there are good and they continue. There is an increase in the amount of our labor expense because we accelerated the path that Tom was already putting the company on to a $20 minimum wage. That was $30 million in the quarter for really a month and a half of expense. Yes, that'll get annualized at the appropriate rate, but I think that's a small dollar amount relative to the amount of transactions that come out of the business, and I think our operating strategy fully funds that. The acceleration of the adoption of self-service and self-install are very helpful in making that viable for not just our employees, but for all stakeholders.
Great. Thanks, Chris.
Thanks, Jonathan. Operator, we'll take our next question please.
Our next question comes from the line of Ben Swinburne with Morgan Stanley. Go ahead please. Your line is open.
Thanks. Good morning. I just want to ask you both about two comments you made in the prepared remarks. Tom, you've been in the business for a long time, and you've been through lots of cycles. I don't think I'm breaking news to say that the cable company historically has not had the best customer reputation and even reputation with sort of regulators and politicians. You mentioned sort of the reputational benefits that the company is seeing. I'm just wondering if you have sort of conviction in that being sustainable or any real data behind that because, obviously, that's not been the lens with which cable operators historically have been looked at. Chris, you were talking about capital allocation, the buyback. You mentioned organic or inorganic opportunities.
I'm just wondering if you could just take a minute to remind us of kind of your M&A framework and sort of the kinds of things you guys historically have talked about either being interested in or not interested in, just so we can flesh out that comment a little bit more, if you're willing. Thanks.
Well, Ben, I've always loved the cable industry and what it does. I've always thought that it has done great things consistently. If you think about the upsides of our reputation, we transform telecommunications. I remember just 15 years ago, 20 years ago, the average wireline phone bill was $75 in the New York area. Today it's $9.99.
If you look at what the cost of broadband was, particularly on a per gigabit basis, think about dial-up, AOL dial-up in the year 2001, when they acquired Time Warner, it was $20 a month, and you got 56 baud or 56K. The cost of broadband has gone way down, and the telecommunications outputs of the investments that the cable industry has made have been tremendous in terms of the benefits that it's created for consumers. Nobody likes paying their cable bill, and nobody likes paying for programming costs. That's always been a difficult aspect of our business.
Since we've had competition in video, since the rise of satellite, and the cable industry had to divest itself of programming essentially because of the vertical integration rules, the programming costs have increased massively, because programming is a copyright, which is a legal monopoly, and they've had pricing power over a competitive video business. Consumers don't like that. Now you have the rise of a la carte direct-to-consumer programming in Netflix and WarnerMedia and Disney and so forth. A lot of our customers have the video they want to buy at prices they want to pay. I think the biggest driver of negativity in the cable business, I think, has been the price of video. To some extent, that's breaking up.
I'm relatively optimistic about our status, and I think that when you really look at it objectively, we have done great things, and I think that the facilities-based competition model that we have in the country has done a really great job of producing really high-quality communication services for consumers.
Ben, on the M&A framework on the inorganic side, I think the prospect is probably more actionable on the organic side, some of the things that Tom's talked about in the past. On the inorganic side with the M&A, nothing's changed with the way that we think about opportunities. As Tom just mentioned, we'd love cable. At the right price, we would do cable all day long. That means tack-ons, which we do frequently as we can, as well as bigger acquisitions. That hasn't been the case to date. They're mostly family-controlled or family-owned. That'll be not in our hands. That'll be in the hands of others who decide that.
Right.
We have looked all around to see if there's anything on the content side. We haven't found anything that really matches up well with our assets and capabilities other than some of the local Spectrum News that we've expanded organically, and that makes a lot of sense for us, and particularly in this environment, has been a big asset. We've thought a lot about wireless. Given the assets that we have, the ability to deploy small cells, the attractive MVNO that we have, we haven't found a scenario that made a whole lot of sense for us or for the industry. There are pieces that we can take a look at to accelerate growth, whether that's in enterprise, or whether that's in wireless technology, where we've made some minority and some joint investments with Comcast.
The same would apply to advertising, but none of those are going to be particularly material. They'll be great for those segments of business and the ability to accelerate growth, hopefully. It's not going to be something that really materially shows up on the balance sheet and impacts our liquidity. All of which leads you back to, I think, unless Tom's got something else he'd add, this leads you back to we think the organic opportunities, and if you can't buy somebody else's cable stock, buying more of your stock at some point in the future is probably between organic and that is where we've ended up in the meantime.
Thank you both.
Yep.
Thanks, Ben. James, we'll take our next question, please.
Our next question comes from the line of Jessica Reif Ehrlich from Bank of America. Go ahead, please. Your line is open.
Oh, thanks. I was just wondering if you could talk about maybe some of the new offers for customers. I think I saw something that you're doing with SiriusXM. Could you talk about any plans you have for Peacock? Do you need to wait for your NBCUniversal renewal at the end of the year? Finally, in terms of customer offers, does the AT&T promo offer for HBO impact the way you would sell or offer HBO?
I had a hard time hearing.
The first question was any new offers, including, I think the SiriusXM trial that we've run out in the marketplace was the question there. The second was Peacock, whether that could happen now or needs to wait until a future renewal. The third was the HBO Max to the extent that it impacts the way that we sell or package the HBO product.
In terms of our offer strategy, I wouldn't disclose those before we do them. We experiment with various offers through time. Not to minimize our marketing prowess, but ultimately, do you have good products, and are they worth what they cost? That's what affects your ability to sell and succeed in the marketplace. We experiment with marketing tactics all the time, and SiriusXM is one of them. We don't have any announcements about future tactics that we might employ. In terms of Peacock, we have ongoing discussions with NBC, and we haven't concluded anything yet. In terms of HBO Max, we just completed an agreement with AT&T, and we're going to convert our customers who have HBO to the new product. We're going to market the new product as part of our overall video offering. We look forward to doing that.
Thanks, Jessica. Operator, we'll take our last question, please.
Our last question comes from the line of John Hodulik from UBS. Go ahead, please. Your line is open.
Great. I'll make it quick. I guess just two quick ones. The first, Chris, on the comment on March advertising, or April advertising, you said variance is twice what you saw in March. Does that mean that we're down sort of 36% so far in April? Any color you could give on what you think how the quarter's going to shape up there? On the CapEx question, you said, given the outbreak, it'll likely come in lighter than you previously expected, which was already lower capital intensity. Any magnitude of change there? If you could give us any color on the buckets, would be great, too. Thanks.
The April comment that I made was really not related to the percentage decline year-over-year. It was really the variance to what would've been our expectations. At $30 million, we had literally come off the books in March. It was already sold. It came off the books. It's over twice that it came off the books for April. We think that'll probably be the trough in April. Small, if that, recovery in May, and maybe depending on how the openings occur, June start to come back. It's not a big part of our business, but it's gonna be a rough advertising quarter. We do think that as things come back online, that there'll be some pent-up demand for advertising on the core local, which for us has been growing.
Our core business has been growing at 3%-4% year-over-year. On top of that, there'll be pent-up demand. Whenever the market opens back up, and a lot of that's tied to the health of SMBs and when the recession or when the distancing starts to open back up. Q2 will be the rougher point. Then the back half of the year, we'll have political advertising, which takes a little bit, from a full year perspective, takes a little bit of the sting out of the collapse that we're seeing inside of Q2. There's nothing about us that's unique there.
Right.
The CapEx side, I think it's way too early. I think all we're signaling at this point is that we've been focused on a lot of different activities right now, and there's the possibility that some of the programs that we've had might be slightly delayed, construction could be slightly delayed. Your installation CapEx certainly is, on one hand going be lower because of a lower unit cost, because of self-installation. On the other hand, we're doing a lot of installations. The volume is very, very high, as Tom mentioned. There's a lot of moving parts there, but if we had to guess, it will probably be slightly off relative to the dollar amount that we intended to spend.
That being said, Craig asked at the very beginning of the Q&A, are there areas that we could accelerate our spend given the strength of our balance sheet and the strength of the business? We'll be moving from a reactive mode into very much a proactive to thinking about what are the things that we could do longer term to even take more advantage of the assets we have. I don't want to prejudice too much other than say right now in the path that we're on it probably looks like there'd be slight minimal, lower dollar amount than we intended to spend this year.
Yeah, the thing I would say about capital spending is we talked about it in terms of pressure testing, really. We haven't changed our commitment to the projects that we're building and the products that we're building. We're continuing to take the business forward. A lot of our capital is success-based. It's modulated automatically by customer creation. To the extent that the market moves around based on macroeconomic effects, so does capital.
Got it. Thanks.
Great. Operator, that concludes our call.
Thank you all very much.
Ladies and gentlemen, this does conclude today's call. We do thank you for your participation. You may now disconnect.