And so we have the Internet. We have the Wi-Fi. Our 5G cellular is a backup service when Internet and Wi-Fi isn’t available. And over — last we reported was 87% of our traffic was going over our Wi-Fi and increasingly [with CDRS] (ph). So 5G, interestingly, it’s the backup radio. It’s the slowest portion of our network. And when you put that all together in a way that I think we’re uniquely capable of doing, we have the ability to offer something in the marketplace. Now the challenge is that’s not the way that it’s been sold. It’s not the way that customers think about it explicitly today in terms of how they purchase service. So there’s an education challenge that’s there in the way that we package, price and market that along the way. We’ll have a meaningful impact.
Another way of thinking about it is that, mobile today, and in fact, I would argue, always has been is just an extension of an Internet connection. And is it really a product? Is mobile a product? Or is it just an extension because even in 15 years ago, it’s really a wireline service going to a tower, and that was just extending the broadband connection. And today, we’re doing that from Wi-Fi inside the home, out on strand. And we have the ability to provide that service in a ubiquitous way that is competitive. And so Spectrum One, the idea is how do you educate the market and try to get the purchase habits to change in a different way. And over time, is mobile really a product and testing and pushing the limits in the market. I think we have something here that’s a competitive advantage, and it just may take a little bit of time to fully flush its way out.
But we are that service provider today, not only to ourselves, but we’re actually providing that backhaul service to more cellular devices on our Wi-Fi routers today. And we are, the backhaul and the backbone of almost all cellular traffic. So it just puts a unique opportunity for us to capitalize on that in the future.
Jessica Fischer: Craig, on the other side, wholesale is a little less than 20% of overall enterprise revenues.
Chris Winfrey: And the piece of that — the piece that’s pulling that is really cell tower backhaul.
Jessica Fischer: Yeah, and that’s really a little less than half of that.
Chris Winfrey: Right. So the traditional wholesale is relatively steady, and it’s the cell tower backhaul that’s in systemic decline, if you will.
Stefan Anninger: Thanks, Craig. Sophie, we’ll take our next question, please.
Operator: The next question comes from Bryan Kraft with Deutsche Bank. Your line is now open.
Bryan Kraft: Hi, good morning. I had two if I could. First, Jessica, related to free cash flow, I was wondering if you could size for us the onetime payment in the first quarter that impacted free cash flow, and also if you could help us understand how you’re thinking about working capital usage this year? And then, Chris, just on network neutrality, I was wondering if you could share your thoughts on the SEC’s recent reinstituting of net neutrality rules. Any concerns with the rules? Do they impact the way you’re running the business in any way, whether it’s on the home broadband or mobile side? Thanks.
Jessica Fischer: Yeah. So, Bryan, the onetime payment that impacted free cash flow on the order of $150 million to $180 million in that range. And then from a working capital perspective, Q1 is always for us a negative working capital quarter. And I fully expect that we’ll sort of make back to close to flat over the course of the year the negative working capital that we had, excluding — working capital excluding the mobile device or the mobile side in the first quarter. Obviously, mobile continues to be a drag on working capital because of the device sales, and so you should expect that piece to continue.
Chris Winfrey: Bryan, on the net neutrality, I’d start from the get go. We don’t — the key concern isn’t net neutrality. The concern is the Title II regime. We’ve — we don’t block. We don’t do paid prioritization. We don’t throttle, and we don’t even have data caps. We believe that customers should have unlimited usage of the service that they’re paying for. The question has really been around Title II and what that brings, things around forbearance on rate regulation, the additional unintended consequences of where that can lead to on regulation for a product that without regulation is that type of regulation has been very successful to delivering tremendous value for consumers over a couple of decades now. I would say that where we’re at in the Title II debate with the FCC, there’s zero surprise.
It’s exactly where everybody thought we would be, and we’re going to continue to go through that process. Unfortunately, it seems like over many years, as this kind of works its way probably back to a court at this stage. And then hopefully, over time, we can get a standard set by Congress that puts this to bed once and for all. That’s always been the hope. But I don’t think Title II is the right way to regulate the things that we’re already doing well.
Bryan Kraft: Thanks. Appreciate it.
Stefan Anninger: Thanks. Sophie, we’ll take our next question, please.
Operator: The next question comes from Michael Rollins at Citi. Your line is now open.
Michael Rollins: Thanks and good morning. Two questions. First, with respect to the residential broadband ARPU performance, can you unpack the benefit in the quarter from the Spectrum One promotions rolling off? And how the potential benefit of this in terms of size can move through the year as more customers start getting back to maybe the normal course rate levels? And then just secondly, in the press release for quite some time now, you noted customers, and I hope I’m framing this right, that our broadband subscribers where there may have been some suspension of collections for other Charter services. And I’m curious what happens to those customers if ACP is discontinued? And do those disclosures provide any insight on how to quantify potential customer risk or churn risk if this program is discontinued? Thanks.
Jessica Fischer: Yeah. So starting on the first one on the Internet ARPU. The Spectrum One allocation was 70 basis points of drag year-over-year on Internet ARPU growth in the quarter. So the GAAP Internet ARPU increased by 1.7%. It would have been 2.4% excluding the mobile allocation for free lines. Generally, I would expect that the gap in those two growth rates should narrow over the course of the year because the base of free lines becomes more stable given promotional roll-off. However, I talked about that we are offering all of our ACP customers a free mobile line for a year. And depending on the level of success of that program, if we did see a reacceleration in the number of free lines, the gap between those two things could widen again.
Talking about what you see inside of the footnote and the aging, so we have had a process over time where we save customers into ACP. So if there was a customer who took multiple lines of business, say they were an Internet and video customer, and they were paying us and then went into a non-pay status but they were eligible for ACP.
Chris Winfrey: Or in it in most cases.
Jessica Fischer: Or already in ACP, what we would do would be to downgrade the customer to an Internet-only product that was fully covered by the ACP subsidy, which enabled them to continue their Internet service. But then they would no longer have whatever the additional services were that were on their accounts. We have held those balances though they’re fully reserved. So they’re sitting in receivables, but they’re also sort of fully written off already in the bad debt reserve process. But you’re correct that numerically inside of the footnote thing, you can see the base of customers who at some point in the past went into a non-pay process but have had their bill fully subsidized by ACP for some period of time.
Chris Winfrey: And if you think about it just from a customer perspective and how we were trying to be responsive to the government request, we wanted to make sure that these customers entering into collection cycle on video or phone didn’t somehow suppress their ability to continue to receive the ACP benefit and continue to receive connectivity. And it’s — that’s a classic example of the base of customers that we’re going to work through, as I talked about from a collection cycle and do the right thing for those customers to do everything we can to make sure that they stay connected to Internet over time, but there’s challenges there.
Michael Rollins: And are you choosing to implement the ACP wind down at the end of April? Or are you planning to go through mid-May with your customers?
Chris Winfrey: We’ll go through the month of May with a partial ACP in accordance with what the government outlined. It’s going to be a partial credit of $14, and we’ve agreed to make it $15 just to round it and make it clear to — and fair to customers. So that’s what we’ll do inside of May.
Michael Rollins: Thank you.
Stefan Anninger: Thanks, Mike. Sophie, we’ll take our next question, please.
Operator: The next question comes from Vijay Jayant with Evercore. Your line is now open.
Vijay Jayant: Thanks. Chris, given your focus on improving the video consumer proposition, I think you have a pretty substantial programming contract coming up very shortly. And [Technical Difficulty] with the Disney agreement. Can you talk about, is there a big [Technical Difficulty] to sort of resize your programming costs associated with that sort of portfolio of channels? And second, I saw that your buyback authorization is somewhere around the $260 million. Is that something that’s going to be re-upped? Thanks.
Chris Winfrey: So, on the first question, the connection was a little off. And so we’re going to sell you a Spectrum Mobile after this call here. But the — so I’m going to want to take the liberty of answering the question I think you asked. Look, we don’t get into detail on individual programming renewals, and we’ve been generally very successful at getting renewals throughout the years. That’s always our goal. Our goal, though, is to really make sure that, first and foremost, that we really change the model so that we once again create value for customers. That starts with not asking them to pay twice for the same product, which is the debate that we’ve had historically and where we set a new model. But it also means approaching the marketplace in all of our deal renewals and saying, look, we’ve got to fight for the customer.
And if they have a path to get a product that’s equivalent or in some cases, even better for a lower price, we should just be selling that product. And that’s the way that we should go to market, and we can have that ability to do traditional linear hybrid. We can sell DTCs. We can sell them in a bundle. We have 25,000 in-house sales representatives in sales and retention. And so we have a workforce that’s very capable of being a distribution engine for linear hybrid DTC. And we have a large base of broadband customers and then certain passings that we can use that’s unique. And we want to do that in a way that creates value for consumers. I think as we’ve approached the marketplace in what is a different way, it creates consternation because it’s something very different.
But our goal here is really to create a video ecosystem that works for customers in providing utility and value again, utility through Zoom and value through our ability to package in different ways that meets the customers’ needs at a fair price. And ultimately, while it may be painful along the way, actually creates value again for programmers and distributors and recreates a video ecosystem that works for everybody. And so we’re not approaching this from a way of just trying to save money. We’re just trying to actually create value for customers by either adding more product so that the price they pay is worth it or saving them money because they wanted to package anyway. And we can do that in a way in the lower churn environment for the benefit of programmers, and that just takes a little bit to get through.
But our goals here are really to recreate a video ecosystem that works for everybody. Today, it doesn’t. It’s been broken, and it’s been broken for a while. And I think that we had the first time in maybe two decades where we can do something where we have a product that we’re proud to put on our Internet bill at some point soon. And that really is when we talked about it last year is the balance of, on one hand, our bundled customers churn less. And so a high-quality video product has always been an asset. But when the rate continues to go up and the value goes down and it’s being sold around customers and ask them to pay twice, then it becomes a liability on the Internet broadband bill. And then I think we need to rethink the way that what we’re selling for video and how it actually creates value for customers or not.
So that’s where we’ve been. And I’m confident we’re going to continue to make progress in this space.
Stefan Anninger: Thanks, Vijay.
Jessica Fischer: On the buyback authorization side, we’re going to make sure we answer that question. The authorization as of the end of the quarter, as you pointed out, is a little bit lower than what you would typically see. There are multiple mechanisms by which that gets renewed, and we have increased the buyback authorization since that point in time. And just because of the readthrough to that, I want to be really clear that we expect to be able to maintain our buybacks over the course of the year even as we de-lever. So you should not read that through as any sort of sign about the direction of the program.
Vijay Jayant: Great. Thanks so much.
Stefan Anninger: Thanks, Vijay. Operator, we’ll take our last question, please.
Operator: The last question will come from Steven Cahall with Wells Fargo. Your line is now open.
Steven Cahall: Thank you. So, Chris, earlier, you said you’re confident in returning to long-term growth, and you spoke a lot about the overbuilding activity that you’re seeing. I think the challenge many of us have is when we pencil that out and kind of think about penetration of fiber and then we look at your passings growth and think about penetration as well, it’s just tough to see when things return to growth on the subscriber side, maybe ex-rural. So I was wondering if you could just give us any thinking as to your color and timing when we might start to see subscriber growth reaccelerate to a positive level. And then, Jessica, just picking up on Bryan’s question. You talked about maybe mobile being a bit of drag in working capital this year. So as you start to do the ACP lines for mobile, could that accelerate the drag for mobile working capital on handsets? Or do you not expect the customers to necessarily be acquiring new handsets? Thank you.
