Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Michael Pace with JP Morgan.
Michael Pace – JP Morgan
The first one, RGUs were a lot better than what we were expecting. I guess, and I apologize, I had to jump off for a little while earlier if you already said this, but can you get in a little bit. Was it the gross adds that were better, was churn better, what was actually driving the net adds for the RGUs? I’m wondering if maybe a lower move rate helped with the churn. On the flip side of the good RGUs, I guess ARPUs were a little lighter than what we were thinking. I’m wondering were there any specific promos that you were doing during the quarter, and then I have one follow up.
John G. Pascarelli
As far as the net adds, it’s a combination of two things going on, Mike. You have greater sales on almost every product category and lower disconnects and downgrades. We’re seeing it on both sides. It’s continuing and it’s what’s leading to the better performance in the net change. As far as the ARPU –
Rocco B. Commisso
The ARPU is pretty flat in relation to last year, Mike. Part of the reason on the ARPU is that advertising is flat. When we do the ARPU per RGU, if you have greater RGUs but your advertising balance is flat, that component leads to lower advertising per RGU. Follow me?
Michael Pace – JP Morgan
Yes. There were also no rate increases at all since last year?
Rocco B. Commisso
We had rate increase in the first quarter, not in the second quarter.
Michael Pace – JP Morgan
Then on CapEx, can you just remind us, what one-time items there might be this year, I guess whether those are 550 upgrades that’s in your CapEx guidance of $275 million? That might not be in your ’09 budget.
Mark E. Stephan
We’ve got rebuild upgrade, we have like 10% of our miles give or take that are going to be affected by what John calls our own version of the digital transition, so it’s a combination of rebuild, upgrade, and going all digital where it makes sense, and we look at the spending differential between what we’ve done historically and what we’re doing in 2008, call it a $40 million type delta, so that $40 million is going to capture traditional rebuild upgrade spending together with head end type investing for all the digital things that we’re doing together with the set top investment that we’ll be making for the all digital systems.
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