Thomas Robey - Senior Vice President-Investor Relations Robert D. Marcus - Chairman & Chief Executive Officer Arthur T. Minson - Chief Financial Officer & Executive Vice President Dinesh C. Jain - Chief Operating Officer.

Craig E. Moffett - MoffettNathanson LLC Jessica Jean Reif Cohen - Bank of America Merrill Lynch Benjamin Swinburne - Morgan Stanley & Co. LLC John C. Hodulik - UBS Securities LLC Philip A. Cusick - JPMorgan Securities LLC Rich S. Greenfield - BTIG LLC Jason Boisvert Bazinet - Citigroup Global Markets, Inc. (Broker) Amy Yong - Macquarie Capital (USA), Inc.

Thomas William Eagan - Telsey Advisory Group LLC Marci L. Ryvicker - Wells Fargo Securities LLC Michael L. McCormack - Jefferies LLC Vijay Jayant - Evercore ISI.

Hello and welcome to the Time Warner Cable First Quarter 2015 Earnings Conference Call. At this time, all participants will be in a listen-only mode. Today's conference is being recorded. If you have any objections, you may disconnect at this time. Now, I'll turn the call over to Mr.

Tom Robey, Senior Vice President of Time Warner Cable Investor Relations. Thank you sir, you may begin..

Thanks Candy and good morning, everyone. Welcome to Time Warner Cable's 2015 first quarter earnings conference call. This morning, we issued a press release detailing our 2015 first quarter results. Before we begin, there are several items I need to cover. First, we refer to certain non-GAAP measures.

Definitions and schedules setting out reconciliations of these historical non-GAAP financial measures to the most directly comparable GAAP financial measures are included in our earnings release and trending schedules.

Second, today's conference call includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are based on management's current expectations and beliefs and are subject to uncertainty and changes in circumstances.

Actual results may vary materially from those expressed or implied by the statements herein due to various factors which are discussed in detail in our SEC filings.

Time Warner Cable is under no obligation to and in fact expressly disclaims any such obligation to update or alter its forward-looking statements weather as a result of new information, future events or otherwise.

Third, the quarterly growth rates disclosed on this conference call are on a year-over-year basis, unless otherwise noted as being sequential. Fourth, today's press release, trending schedules, presentation slides and related reconciliation schedules are available on our website at TWC.com/investors.

Finally, following prepared comments by Rob Marcus and Artie Minson, Rob, Artie and COO Dinni Jain will be available to answer your questions. With that covered, I'll thank you and turn the call over to Rob.

Rob?.

we're simply executing better across every facet of our business. I'm sure Dinni, who's really been leading the charge, will give you his perspectives during Q&A. But let me share my view of some of the things that are making a difference. First is customer service. Our network operations, care and tech ops teams are playing at the top of their game.

During 2014, we made significant investments to improve the reliability of our network. As we've discussed before, our advanced diagnostic tools now allow us to identify those components of our plant that are likely to result in customer impacting issues.

We've been using that information to proactively address network problems before they have an impact on our customers. In and of itself, that's obviously good for customers, but it also means we're getting fewer repair calls into our call centers.

Less activity in the call centers allows us to improve service levels, which is the speed with which we answer our calls, and it gives our reps more time to effectively address those problems that do arise. We've also invested in better training and tools for our reps, so more problems can be handled over the phone.

In Q1, that resulted in 15% fewer truck rolls for repairs than a year ago and 27% fewer than in the first quarter of 2013. When we do roll a truck, we're giving customers industry-leading one-hour service windows and in Q1, we arrived within those windows an impressive 97% of the time, that's an all-time high.

And we're continuing to add weekend and nighttime appointments as well. In short, we're serving customers on their schedules rather than ours. Not only have we made great strides in customer service, but our products are better too. We're completing the rollout of a fivefold increase in VOD capacity this quarter.

We've also continued to enhance our TWC TV streaming app. In fact, we recently added TWC TV to the Xbox One platform. Customers are responding enthusiastically. We set another all-time usage record in March with 55% more visits than a year earlier.

At the same time, we continued to expand our Wi-Fi network and March usage was more than three times higher than last year's. And we continued to add value to our phone product. As of this month, our phone customers can make unlimited calls to India for no additional charge.

We already include unlimited calls to Mexico and China, so TWC phone customers now have unlimited access to around 40% of the world's population. We continued to install new, more capable equipment in our customers' homes. We accelerated the pace in the first quarter, installing almost 2.4 million new modems, set-top boxes, and digital adapters.

And TWC Maxx continues to perform – to transform the customer experience for millions of households in the TWC footprint. With Maxx, customers get greater reliability, all-digital video, standard tier speeds of 50 megabits per second and higher tiers of service with speeds up to 300 megabits per second.

New York City, LA and Austin are complete, Dallas, San Antonio and Kansas City are underway and Charlotte, Raleigh and Hawaii on the docket for later in the year. We also plan to begin the Maxx process in San Diego this year and finish up in early 2016. It's still early days, but Maxx certainly appears to be making a difference.

Customer feedback has been great and churn among Maxx customers with new DOCSIS 3.0 modems is dramatically lower. And with all these customer experience enhancements as a backdrop, our customer acquisition and retention machine is firing on all cylinders.

The robust $90 triple-play offer that we introduced back in October continued to resonate with customers and drove meaningful year-over-year improvement in connect volume. Our sales channels performed very well with online growing most significantly.

Churn rate and absolute disconnects were also down year-over-year despite the fact that we increased rates and fees in Q1 this year versus Q2 last year, quite an achievement. In Business Services, I'm convinced that we have the best team in the industry. We again generated terrific results in Q1 as we executed from our proven playbook.

For the 15th quarter in a row, Business Services revenue grew by more than $100 million year over year. And with improving margins, Business Services' OIBDA contribution is growing even faster than the top line. And we continued to invest for the future.

At quarter end, we've got 911,000 commercial buildings on-net, which sets us up well for future sales growth. Our Q1 revenue run rate was over $3.1 billion and we're right on track to reach $5 billion in annual revenue by 2018. So in summary, I feel great about the overall health and trajectory of our business.

We've made significant investments to drive performance and those investments are paying off. We are a far stronger company than we were just five short quarters ago.

As we look towards the balance of 2015, from an operating perspective, we'll keep doing what we've done so well for the last 16 months, including continuing to make the necessary investments to set us up operational and financially for 2016 and beyond.

As for capital allocation, the fact that we've deleveraged while we waited for deal approval is not lost on us. It's been a busy week, but rest assured, we will be working with our board on our go-forward plans with respect to dividends and buybacks.

Before I pass it over to Artie, and with the Comcast merger now in our rearview mirror, I want to reiterate a couple of things that I said to you back in January of last year of my first earnings call as Time Warner Cable's CEO.

I told you that I believed Time Warner Cable had terrific assets, a world-class team, and a well-architected operating plan and that I was confident in our ability to drive growth. I also told you that I was totally committed to maximizing shareholder value. Both of those statements are as true today as they were 15 months ago.

I firmly believe that everything we've done over the last year plus validates what I said back then. We look forward to your continued support as we move this great company forward. Now, let me turn it over to Artie to cover the key takeaways from our first quarter results.

Artie?.

it takes a lot of energy to get the flywheel going. But once it is going, its momentum will keep it spinning for a long time. Similarly, in our business, you have to spend to get the subscriber machine running. But once it's running like our flywheel is now, you're in a great position to deliver strong sustainable financial growth.

Moving down the income statement, first quarter adjusted diluted EPS was $1.65, down $0.13 from a year ago. One of the biggest drivers of lower EPS in Q1 was depreciation expense, which, again is a clear reflection of the massive investments we're making to improve the operations and future prospects of this company.

And I would remind you that with the suspension of our share repurchase program when we announced the Comcast transaction, shares outstanding were actually up $4 million year-over-year. This compares to the prior two years when shares outstanding were coming down at least 14 million shares a year.

Free cash flow was $407 million in the first quarter, down $222 million year-over-year primarily due to the $300 million year-over-year increase in capital investments.

Remember also that while bonus depreciation was extended at the end of 2014, it happened so late in the year that we had treated all of our 2014 federal tax payments as if it wouldn't be extended. And since we don't make a payment in Q1, we'll get a Q2 benefit of approximately $120 million due to the overpayment of federal taxes last year.

CapEx of $1.1 billion in the first quarter was the highest ever in a first quarter, reflecting improvements to the plant, our aggressive investments in CPE as we continue to deploy new set-tops, digital adapters and modems in mass markets and our accelerated replacement of older, less reliable set-tops across the footprint.

We also continue to invest in the future growth of Business Services. We connected nearly 12,000 commercial buildings to our network in Q1 and increased our serviceable revenue opportunity to approximately $18 billion. As we indicated, we were spending aggressively on CapEx ahead of the anticipated merger closing.

Coupling that with our initiatives for the rest of 2015 will result in full-year CapEx being a little higher than last year. Finally, we are also working through our go-forward capital allocation plans with the board, as Rob noted.

We obviously delevered over the last 14 months and are currently levered at approximately 2.9 times with the usual adjustments.

We realize that smart capital allocation, including buybacks and dividend increases, has been a big part of the Time Warner Cable story and we expect it to be in the future, along with the opportunity for significant go-forward value creation from ongoing improvements in operations.

With that, let me turn it back over to Tom for the Q&A portion of the call..

Thanks, Artie. Candy, we're ready to begin the Q&A portion of the call. We would ask each caller to ask a single question so that we can accommodate as many callers as time permits. First question please..

Thank you. And our first question comes from Craig Moffett of MoffettNathanson..

Hi. Good morning. So I guess I have to ask about the elephant in the room, but given Artie's discussion about the payoff for the investments you're making now really doesn't come in until 2016.

How do you think about the M&A opportunities in front of you between now and 2016? Would you prefer to defer any decisions until after you start to see the flywheel as already described it paying benefits? Or can that all be priced in upfront and whether you're a buyer or seller or what have you?.

Craig, it's Rob, I'll take it.

You know that we're not really going to respond to questions about any M&A except to say that one, as we made it abundantly clear this morning, we feel great about the operating health of our business right now, and two, we're going to be guided by the same principles that have guided us heretofore, which is doing what's in the best interest of our shareholders.

Period..

Okay.

Can I slip in an operating question then if I can't get a – (28:59)?.

Go for it, Craig..

Where are the subscribers coming from? The numbers you put out in basic video especially are particularly strong.

Are you seeing a real sea change with respect to satellite TV or is it weakness in AT&T viewers or some combination of the two?.

Craig, this is Dinni. It's always tempting to look at this as complete a zero-sum game as if, if we're growing that that absolutely means that somebody else is doing something bad or not executing as well as they want to. I think the reality is, there are a lot of jump balls as we call them.

Every time a customer moves, every time a customer is looking to change, and we are winning a lot more of those jump balls and we were winning last year or the year before. And I think that's because we're so focused – we're so focused on a lot of small things from an execution standpoint. And I think we're slowly winning on those things.

So I don't think that there is a great answer there for you. We have a triple-play offer that's not dissimilar from a lot of the others in the industry. We're not particularly really aggressive in our offers or in our promotions, but what we're doing is executing very well on both sales and marketing, particularly in care and tech ops..

The only thing I'd throw in, in addition to what Dinni just said is that our performance is improving against all competitors. And in fact when you look at how we're performing in markets where we compete with FiOS and U-verse, connects are up and disconnects are down. And that really reflects the strength we're seeing against all players..

Right. Thank you..

Thanks Craig. Next question please, Candy..

Thank you. Next question of Jessica Reif Cohen of Bank of America Merrill Lynch..

Thanks. Also two questions if it's okay. First, on your calendar 2016 guidance, it's a bit lower than what you've stated in the past.

What changed?.

Hey, Jessica, it's Artie. There's a couple of things I would point out. One is obviously pension. We talked about $26 million year-over-year in Q1. So, if you analyze that, that is $100 million right there.

The second is obviously, we do not have a Dodgers deal at this point so that that certainly has an impact and programming costs have also been higher than we had anticipated. Obviously 12.2% per basic sub growth was more than we had anticipated than when we did the plan.

Jessica, was your question 2015 or 2016, I'm sorry?.

2016. Is that – I think Artie, it was 2016..

2016, and my answers really were applying to 2015. I think 2016, you also have ad sales is also – we will be presumably off a lower base going into next year as well, so that also has an impact..

I would just say Jessica, as an overall comment, relative to the three-year plan we articulated prior to the announcement of the Comcast deal, we feel very good about how we're tracking. Any plan, you have puts and takes, some things you're ahead on, some things you're a little bit behind on.

With respect to subscriber metrics, we're tracking extremely well. We're ahead of where we thought we'd be. With respect to underlying operating metrics, how we're doing in terms of improving the customer experience, we're ahead. Admittedly, that's requiring some additional investment. And as a result, we're tracking a little bit behind on OIBDA.

But overall, I feel like we're tracking very well against the plan..

And so my second question actually relates to the tremendous growth that you've had, I mean the improvement in video subs. It's really encouraging how much you've improved over the last few quarters.

What is your longer-term view of pay-TV penetration and the bundle overall? Can you give us – how do you see this playing out? Will we have a full bundle, which seems to be a better value proposition? Or do you think consumers want skinny packages? Will they move to OTC? How do you think about it?.

I think there's a lot of play left in the plan that we're executing right now. I think there's a lot of play left with triple-play. And just a little while ago, people were acting like the phone product was completely dead and the ability for us to go out and aggressively sell phone as part of a triple-play was very limited.

And I think we've shown that that's not actually the case. There's a lot of attraction in the press about skinny packages. I think a lot of the times, customers don't want to get bogged down in a lot of choices to make on those kinds of things. There's a lot of value in our triple-play packaging right now and it's a simpler sale.

And I think that there's a lot of play in that. And I think that in terms of skinny packages, we don't want to be pioneers on that. There's a lot of talk and a lot of work going on out there from other guys.

And if any of their things work, we'll just be fast followers on that stuff because I think there are some segments of our customer base where that is going to have appeal..

Great. Thank you..

Thanks, Jessica. Next question, please..

Thank you. Next question of Ben Swinburne of Morgan Stanley..

Thanks, good morning. Artie, just quickly, is 3.25 leverage still the target on Norstar that we should be thinking about? And just to clarify, are you assuming that Dodgers are carried in 2016, in the 2016 guidance or not? And then my real question maybe for Rob or Dinni is, the customer metrics are clearly strong.

I think you guys have had your new pricing and packaging out for about a year. But the ARPU growth, and you had some price increases in Q1, the revenue growth per customer relationship was about 1%.

And I'm wondering given you talk about high-quality subs coming in on both video and data, and we should be lapping some earlier promos, why isn't that number higher now? And do you expect that to accelerate this year? Or is that really more going to take place next year based on your current plan?.

Hey, Ben, it's Artie. Let me – with respect to the Dodgers, I'm not going to get into sort of any of the specifics – underlying assumptions in the plan. We continue to think that Dodgers product is a great product and I will leave it at that.

In the 3.25, as I indicated in my proactive remarks, we will be engaging with the board on a review of our overall capital allocation philosophy. So I frankly don't want to get ahead of those conversations either.

One, before I turn it over to Rob and Dinni on the ARPU per CR, one thing I would just point out is, we are, which is a good thing, increasing the denominator on customer relationships. We're adding new customers and they tend to come in at a lower ARPU than the rest of the base.

The good news is, they're coming in, the new customers, at a higher rate than they had in the past, but still they come in less at the overall base, but we'll make that trade-off all day long..

Yeah, I think Artie hit it on the head. Some of this is just math. The better you do in terms of volume, almost definitionally, given that we live in a world where new customers come in on promotional pricing, that means that ARPU comes down. And that's why I always counsel against putting too much stock in ARPU on its own.

Really what you want to focus on is where overall revenue is going, and that's why we're so pleased with the organic revenue growth in residential, which is the best it's been in over three years. So look, I think we feel very good about the quality of the subs, customers are coming in at higher tiers of service.

In video, we added 30,000 video customers. In fact, we added close to 150,000 to our preferred tier of service. Similarly, HSD customers are coming in at higher tiers of service, higher speed tiers. And interestingly enough, we're less reliant for growth than we have been in the past on our Lite tiers of HSD service.

So, I think all this bodes well for ARPU improvements down the road and I'm not troubled at all by what seems like lower ARPU growth than we've had in the past..

Thanks for the color..

Thanks, Ben. Next question, please..

Next question of John Hodulik with UBS..

Hey, thanks, guys. Just a couple of questions around the CapEx guidance. You guys did about 20% of sales this quarter, up pretty meaningfully versus on a year ago number.

Is that 20% a good number? I know it's a ways out, but does CapEx fall in 2016? Is 2016 sort of the top? Or how do you expect that as a percentage of sales curve to sort of flow through? Thanks..

Obviously, we didn't give 2016 capital guidance today and I'm not – in the proactive remarks, and I'm not going to give any additional color today. What I will tell you is, we continue to be really pleased with the returns we're seeing on our CapEx spend.

It has, I think the proof is obviously in our operating performance, our customer metrics, where we sat last year, there were things we really wanted to accomplish when we made the investments, which was, improve our product reliability, improve our network reliability, make sure our customers had the best equipment in their homes for new customers, go into existing customers' homes and take out equipment that we thought was not optimizing the experience.

And I think the proof is in the subscriber results today. So to the extent we continue to see those results which we expect to, I think that obviously requires capital, but there's a great return on that capital. Obviously also, we continue to invest in Business Services. The business is at a $3.1 billion run rate.

We added 12,000 buildings to the network this quarter, and that's another place you're going to continue to see investments. But all that has very, very good returns on it..

Okay. Thanks for the color..

Thanks, John. Next question please, Candy..

Thank you. Next question of Phil Cusick of JPMorgan..

Thanks. Same topic from a different direction.

As I think about the all-digital pacing, where do you think you can be in terms of markets or subscriber or footprint by the end of 2015 and when does the all-digital transition sort of get done? And then the other side of it is, on the set-top box, your high-end box, I would say, is much better than you've had historically, but probably not up to the level of an X1 and some of the competitors.

How do you think about the durability of that box in the marketplace long-term and do you think about doing something else? Thanks..

Phil, we've laid out the schedule for rolling out TWC Maxx, which really includes the all-digital conversion. I think that takes us to somewhere between 40% and 50% of the footprint by the end of the year in terms of homes passed.

And the exact pace at which we continue that process in 2016 and 2017 I think in part depends on the experience we have in 2015, where we're feeling better about our ability to roll out all-digital this year than we did last year, which was really the first year of the program.

And we'll evaluate as we go into 2016 how quickly we think we can ramp the next batch of systems, so that's the pacing. In terms of the set-top box question, I think your question really goes to the guide or the user interface as opposed to the box.

Is that correct?.

Yeah. That's fair..

Okay. So look, right now, we have on – I believe 8 million set-top boxes, so a real mass deployment, what I think of as a very robust cloud-based guide. And I think that concept of having a guide in front of that many customers, that great of proportion of our total subscriber base, might be ahead of the rest of the pack in the industry.

It's – the current version of that guide has a great rich graphical user interface, and we've seen the impact of that already in that usage of VOD amongst customers who have that guide, is a lot higher than on the prior boxes. So I feel very good about where we are in terms of the guide.

We do have a next-generation cloud-based guide, which is following this one, which is in some paying customers' homes right now and will be more broadly deployed in the back half of this year. But that only makes what we've got today even better. I feel very good about the current guide offering..

Thanks, Rob..

Thanks, Phil. Next question, please..

Thank you. Next question of Rich Greenfield of BTIG..

Hi. A couple questions. First, just video ARPU improved from flat year-over-year in Q1 last year to up 2% in Q1 2015, while your high-speed ARPU growth went from up 9% a year ago to only up 3%.

Why is data ARPU growth slowing while video ARPU growth is improving? I assume there's discounting in there as well as year-over-year rate increase timing but just, could you give us a bit more clarity on how those metrics are performing..

Sure. Hey, Rich, it's Artie. What you may recall is, if you go back over a year ago, we were doing, what I would call, product rate increases. So you may, at one point in the year, get a video rate increase, and you may, at another point in the year, get an HSD increase.

You may recall in the comparison year you have that we increased our HSD modem fee, and that drove HSD ARPU in that year.

This year when we went out, we went to what we call the unified rate increase, which was one increase to a customer per year regardless of the number of products, and that had more of a allocation across the different product lines of that increase.

So as we've said in the past, we tend to not sort of focus too much on the individual product ARPUs, but that difference in approach to how we do rate increases is impacting the year-over-year product ARPU comparisons..

And then just a question for Rob because I think this is kind of the elephant in the room in terms of your stock price. How do you think about the value currently of your stock? Given the performance of the company today versus a year ago, obviously stock is up a lot from when you had a whole bunch of approaches over a year ago.

How do you think about the intrinsic value of where your stock is currently trading? And how investors currently perceive the company at current levels?.

Yeah, Rich, your connection is lousy, so I only heard part of it, but I think I got the gist. We're not going to comment except to say that everything we said today supports the notion that we feel great about the spot we're in. We think that our strength yields terrific confidence for the future.

And we're pleased with the overall health of the business, period, end of story..

Thanks..

Thanks, Rich. Next question, please..

Thank you. Next question of Jason Bazinet with Citi..

Just a quick question for Mr. Marcus. Maybe a strange one in light of your positive net adds on Video, but I know investors care about it given some of the bigger changes maybe going on in the industry.

If a customer ends up terminating their video subscription with you and you have a, whatever it is, $35 gross profit shortfall, how do you internally think about bridging the gap to claw back to break even? In other words, is it taking standalone data higher, is it consumption data, are there other costs in there where video isn't as profitable as it may appear? Just how do you think about that?.

Yeah, Jason, I've been asked that question numerous times in the past. And I think it departs from the reality of the marketplace. At the end of the day, we've got to figure out how to have competitive products that are really compelling to customers. So it's not so simple as taking money from one bucket and sticking it in another bucket.

We're very focused on delivering compelling products to customers at a price that delivers real value. And beyond that, we think the rest is going to work itself out. But we can't think in terms of taking gross margin dollars that are lost because we lose a video customer and somehow embedding those into HSD and not seeing an impact on HSD.

So I think we're going to not really think about the world quite that way..

Okay. All right. Thank you..

Thanks, Jason. Next question, please..

Thank you. Next question of Amy Yong from Macquarie..

Thanks. My question is actually on AT&T and DTV. And I guess with the merger closing around May, June, do you anticipate any bigger changes on the promotional side or competitive landscape? And then just really quickly, Artie, how do we think about cash taxes for this year? Thanks..

On DIRECTV-AT&T, obviously, that deal has not yet closed. And at this point, no, we don't anticipate any change really in the promotional pricing. Arguably a deal like that where two companies that actually do compete with one another in the marketplace, if it were to close, would reduce the number of competitors in the marketplace.

And as a general matter, that's good for the other participants in the marketplace, so I'm not terribly worried about it..

And Amy, our cash taxes, at this point, our outlook is about $475 million for the year. If there was an extension of bonus depreciation, that may reduce cash taxes by another $100 million. You'll recall that last year, it happened so late in the year that frankly, we had already made our estimated tax payments.

So with no extension, you're sort of looking in the $475 million range..

Great. Thank you..

Thanks, Amy. Next question please, Candy..

Thank you. Next question of Tom Eagan with Telsey Advisors..

Super. Thank you very much. Rob, I think it was the last earnings call, you mentioned that the CBC Wi-Fi offer was interesting, but you felt the need for some kind of backup. Any comments on Wi-Fi. Thanks..

I'm not sure I have much to add to what I said last quarter. We continue to be big fans of Wi-Fi. Our high-speed data customers now I think have access to something like 400,000 Wi-Fi hotspots across the country, when you include both the Wi-Fi hotspots that we've deployed and the Wi-Fi hotspots of our various cable partners.

I think that's a great value-add. We saw increased usage amongst our high-speed data customers of Wi-Fi this quarter. So we'll continue to invest to broaden that network because we think it makes our high-speed data product that much more attractive.

Whether or not there's a play which is more of a cellular replacement strategy, which may include voice, I think that remains to be seen. I said that I thought the Freewheel offering from Cablevision was intriguing, but I'm inclined to watch and see how that evolves and then we'll see how best to develop our own strategy on that front..

Okay. Thank you..

Thanks, Tom. Next question, please..

Thank you. Next question of Marci Ryvicker with Wells Fargo..

Thanks. I have two. In your prepared remarks, you talked about the timing of rate increases this year versus last year.

Can you say anything about the magnitude? And then secondly, given all of the uncertainty obviously going around the deal, how are you positioned from a personnel perspective? Is there going to be some sort of hiring outreach? Thanks..

On the rate increases, Marci, some of them hit Q1. And we'll basically get a full quarter impact on Q2. You will recall that last year as I said, it's almost a sea change in how we did rate increases whereas last year, we had more rate increases in different quarters, particularly around HSD and modem fees, so really a different approach.

What I would tell you is overall this year, our rate increases went to more customers, but the average customer got a meaningfully lower rate increase. So we talk a lot about the goal of getting back to a balance of rate and volume. And obviously one of the ways we did that is to not be as dependent on higher rate increases.

So we went broader with them, but not as much on individual bills..

Marci, as far as the team goes, one of the things that I am proudest of and has impressed me the most over the course of the last year and change is just how fabulously the team has hung together and performed in the face of what were at times challenging circumstances.

Bottom line is, if this team could hang together through what we just went through, we're about as well positioned for the future as one could imagine. So I feel very good about where we sit in terms of the team..

Thank you..

Thanks, Marci. Next question, please..

Thank you. Next question of Mike McCormack of Jefferies..

Hey, guys. Thanks. Artie, maybe just a quick comment on the programming expense trend, maybe on a per sub basis and what you're contemplating in the guide.

And then one for Rob, thinking about the, I guess, the future of TV watching and the younger demo, is there a movement at some point to a set-top or CPE Lite model meeting the demand for maybe the current product, but only on an app space basis?.

On the programming increase, we obviously didn't get into any specifics in the full-year guide. What I would tell you though is a lot of the dynamics we saw in Q1 do continue through the rest of the year. There are some lapping of products that were launched later in 2014.

But we frankly – I think you're not going to see that much of a change this year..

Mike, in terms of the concept of a set-top boxless video product. First, before I get to it, let me just say that there tends to be, in my opinion, an obsessive interest in millennials, maybe at the expense of the broader customer base.

And I would tell you that for most of our customers, the vast majority of our customers, the way we currently deliver the video product is pretty darn attractive. That said, sure, there's a group of customers who might very well like to access video via other means.

And that's one thing we've been incredibly aggressive on over the last several years is making the video product available on multiple platforms, whether it's iOS platforms, iPads and iPhones, Android-based platforms. Most recently, we launched the Xbox.

So it is definitely the case that over time, I can see a world where more and more customers consume our offering without needing to lease a set-top box from us. But that doesn't mean we're going to abandon the largest portion of our customers who actually do like the current model..

Yes. It just seems like if you can move to no truck roll, self-install and a cable modem and save on that side and the cost side, it could be an interesting model going forward..

Without a doubt, for a certain portion of our customer population, that could be incredibly attractive to them and maybe financially very interesting for us..

Great. Thanks, guys..

Thanks, Mike. Next question please..

Thank you. Next question of Vijay Jayant with Evercore ISI..

Thanks. I just wanted to – you're talking about nearly 10% EBITDA growth – OIBDA in 2016.

Can you give any breakdown on how much of that is really going to be driven by step ups in promotional pricing going to full-rate pricing versus some of the investments in customer care and tech ops sort of normalizing so that we get a better sense? And I have a follow-up. Thanks..

Hey, Vijay. It's Artie. I would just point out a couple of things. To your point on tech ops and customer care, we basically have had the stair-step increase in investment this year. And so that, to your point, begins to normalize out. As you think about programming, I would think we don't have any new launches on the horizon right now.

We also though, I think the really key thing is, and I talked a little bit sort of as the Flywheel of the business, when you start adding subscribers and have that momentum and have a full year of subscriber add wind at your back, this year, we're still dealing with losing subscribers and losing individual products last year, it's impacting this year's results.

That is sort of the biggest driver of the overall increase. You saw the acceleration in residential growth. But that should – that growth rate should continue to accelerate next year and you continue to see strong growth in Business Services. And on the ad sales front, it's obviously a political year, so that provides some benefit as well..

On Title II broadly, obviously you guys still investing on your network and increasing broadband speeds. Can you talk about any changes in how you're thinking about raising high-speed data pricing longer term or the prospect of introducing (58:23) pricing given what you know now? Thank you..

At this point in time, no changes to our overall philosophy, but obviously we're going to be watching closely how things unfold on the Title II front.

We've said in the past that our normal business practices comply entirely with the notion of the open Internet, no blocking, no discrimination, no throttling, and transparency are fundamental parts of the way we do business.

So to the extent that that's the full scope of what's getting incremented under Title II, I think you won't see a change in the way we do business. To the extent that something more comes from this, as we would describe an excessively broad grant of authority, then we'll have to revisit the way we're approaching investment and pricing..

Great. Thank you..

Thanks, Vijay. I think that's all we have time for this morning..

For those of you planning ahead, our second quarter earnings conference call will be held on Thursday, July 30, 2015 at 8:30 A.M. Eastern Time. Thanks for joining us..

Thank you for your participation. That does conclude today's conference. You may disconnect at this time..