GSM positioned for future of votingGlobal Election positioned for future of voting
Global Election Systems Inc
GSM
Shares issued 18,583,672
2000-11-20 close $2.35
Tuesday Nov 21 2000
Street Wire
HIGH-TECH VOTING MAY BE ANSWER TO U.S.
ELECTION MESS
by Stockwatch Business Reporter
In a world of surging Internet access, on-line banking and
automated teller machines -- not to mention the widespread
availability of cheap electronic calculators -- the events
following the Nov. 7 U.S. presidential vote in Florida were an
uncomfortable reminder that while the United States may lead
the world in developing and using computer technology, there
remain stubborn pockets of technological backwardness
capable of delaying national-election results in the world's
only superpower for weeks, possibility longer.
University of Iowa computer science professor Douglas Jones
says Global Election Systems is one of a half-dozen-odd
electronic voting machine suppliers that are in a position to
benefit from an election-hardware rethink that is sure to
follow the Florida recount debacle. He says electronic voting
machines will most likely replace a hodgepodge of antiquated
systems that have been in continuous use, in some places, for
more than 50 years.
BOOMING MARKET
"All these competitors are positioned to take advantage of
what will be a booming market as jurisdictions that have been
using punch cards run like the dickens to get away from this
technology," Prof. Jones says. "In the near term, I would
expect a big shakeup because of this election disaster and a lot
of people are going to be out shopping for new voting
hardware." Farther down the road, Dr. Jones contends that
with the emergence of direct recording electronic voting
machinery and the changing industry standards that will
probably emerge, "Global is in a position to do well."
Global has already proved the benefit of its electronic voting
systems in the current Florida pressure cooker -- as have some
of its competitors that have their own systems operating in the
state. When officials in Florida asked for recounts of all
balloting, results from Global's machines were recounted in
hours, not days or weeks. More importantly, the recounts were
quickly cleared by election officials as accurate, without
controversy and without the lawyers or images of workers
haggling over whether a hole was fully punched through or
whether a hanging chad was, in fact, simply an errant bit of
paper.
"We have 17 counties in Florida and on recount all 17 had
exactly the same results" as the original vote tallies, says
Global director Clinton Rickards. In some jurisdictions,
officials wanted the company to feed through the original
hard-copy ballots, while others were satisfied with a simple
retally of the totals. "Because the totals came out the same,
there was no problem," says Mr. Rickards, a programmer who
in 1986 began developing the forerunner of Global's current
electronic voting systems.
The developments provided Vancouver-based Global with a
short-term boost. Its shares gained 88 cents to $2.65
(Canadian) Nov. 13 on unusually high volume of 865,432
shares on the Toronto Stock Exchange following an initial
flurry of press coverage about the company; the shares have
since eased to $2.40 (Canadian) on much lighter volume.
According to Global officials, what is more important than the
short-term gains of the shares is the credibility the company
gained in the Florida recount and how the issue of electronic
balloting has been highlighted as an area that needs legislative
attention.
Some states are moving quickly toward updating their
mid-20th-century balloting technology. In Georgia, Secretary
of State Cathy Cox is pushing for a uniform electronic-voting
system. She is hoping for a 25-county pilot project by 2002
and possibly a statewide rollout in time for the next
presidential election. The Wall Street Journal quoted Ms. Cox
as calling electronic balloting a "superior" system and
Georgians will have the opportunity to decide whether
statewide electronic balloting is worth the cost.
STEEP PRICE
The cost is much higher than hole-punch or any of the older
systems. A California study indicated that if Los Angeles
county were to upgrade to an electronic system (it is now
predominantly punch cards), the cost would be $350-million
(U.S.).
Larry Ensminger, Global's vice-president of business
development, says the cost is variable and tends to work on
volume discounts -- the more you vote, the cheaper they are
per voter. Global's AccuTouch touch-screen system costs
$3,500 (U.S.) per unit "plus or minus many other factors," Mr.
Ensminger said from the company's Texas office. Each unit
would typically handle 350 registered voters, and that number
can also change depending on the state, county or precinct in
question. The systems are scalable, so additions can be made
at a later date.
The Florida fiasco has raised the issue of voting reform to the
point that many states are considering an appeal to the federal
government for funding to overhaul their present systems.
Counties are responsible for all three levels of government
elections -- civic, state and federal. In the past, states and
counties provided this funding. "What I'm hearing now in just
the past week is that a lot of the senators and governors are
saying that maybe they should have the power to upgrade this
technology," Mr. Rickards says.
Global, which is also listed on the OTC Bulletin Board, has
built its annual revenues from $3.5-million (Canadian) for the
year ended Dec. 31, 1992 (net profit $58,825(Canadian)) to
revenue of $20,236,828 (U.S.) and net income of $1,107,419
(U.S.) for the year ended June 30, 2000. Its balance sheet is
bolstered by a working capital position of $14,731,648 (U.S.)
and retained earnings of $22,496,464 (U.S.). While closely
held competitor Election Systems & Software Inc. (ES&S)
dominates the field, with systems in 2,200 U.S. counties and
350 employees, Mr. Rickards contends that the smaller Global
(its systems are in 850 jurisdictions worldwide, including
Canada) sells more new equipment.
Formed by the 1997 merger of American Information Systems
and Business Records, ES&S can traces its origins in the
business to the mid-1960s. Global is much newer. Its first sale
was in 1989 to a county in Minnesota, while the second sale
was in 1990 to Tallahassee, Florida's state capital and centre
of the current recount controversy. It listed on the former
Vancouver Stock Exchange in November, 1991, following the
1:8 rollback of Macrotrends International Ventures.
FLORIDA EFFECT
The Florida vote has probably advanced the electronic voting
industry's marketing efforts by years. Today, punch card
technology (at 37-per-cent use, the most popular system in the
United States) dates to the 1960s, while hand levers, which
date to the 1940s, command 22-per-cent popularity. One in
four use optical scan systems, while 7 per cent of U.S. voters
use keyboard or touch-screen systems.
With an overhaul of the country's voting system over the next
few years a possibility, the industry's existing players may
fear some of the bigger computer companies may want to enter
the sector to dominate what could be a lucrative field.
At least one industry source says participation by major
computer companies is actually an opportunity for these
players. "IBM and Unisys have tried to get into this business
and have been in this business," he says. "IBM was the creator
of the punch-card system in the 1960s, and Unisys has done
some developmental work in this area as well." The
difference is that the larger companies do not have the
patience for the long gestation periods needed to make a sale,
and are happier to see sales of their hardware run the software
developed by players in the electronic voting machine
industry.
Global makes two models of electronic voting systems. One is
AccuVote, a PC-based optical scan system, in which voters
shade in the candidates of choice with a pencil and a scanner
records the results; a paper record of the vote is left with
officials. This system, of which Global is only one supplier, is
used in about a quarter of the nation's 3,140 counties.
The other system is AccuTouch. With it, voters are given
smart cards that contain the data needed to vote for candidates
in that particular precinct. Once inserted, this information is
displayed on a 15-inch monitor in large letters and the voters
touch the screen to indicate his or her preferences. These
systems are used by about 7 per cent of voters.
Mr. Rickards says that older people appear to have few
problems with either the touch-screen or optical scan systems.
"We find that seniors have no problem, either filling out a
ballot or filling in a circle or touching a screen," he says,
adding that the touch-screen system is particularly
user-friendly. "It's in very large type and it's impossible to
cast a double vote. Make a mistake and do it again. You can't
put in another vote until the first is erased," Mr. Rickards says.
A number of Canadian jurisdictions have picked up Global
products, including the City of Vancouver, which used the
optical-scan system citywide for the civic election in
November last year. Global's touch-screen system was first
used in the Barrie, Ont., civic elections held last week.
WAY OF THE FUTURE
Prof. Jones says that over the years advanced voting
technology has produced what might be considered
surprisingly similar results, indicating that the main players
are making the best use of available technology and arriving at
the same "solutions." He says that independently of each other,
Global and its main competition came out with machines
whose technology is remarkably similar but not the same. One
competitor, Fidlar Doubleday Inc., uses a personal
identification number (PIN) in its touch-screen system, while
Global uses a smart card. Both systems are designed to be
networkable and both are designed with the possibility of
Internet voting in mind.
"Each has independently come up with effectively the same
idea for what the future ought to look like, and they're right in
their big picture view," Prof. Jones says.
The similarities between the systems tend to end at that point,
however. The real differences are found in the programming,
and the professor says what is needed before the technology is
accepted on a truly national scale are standards. Given
uniform standards, competing suppliers will provide voting
systems that are essentially the same technology but which
may look and feel slightly different; additions could be made
using different suppliers.
At the moment, no such standards exist, and getting the
industry to agree on such standards may be a challenge.
Further, "The current federal and state laws do not properly
allow for the state of the art, much less what the state of the art
will be," Dr. Jones says. Talk of such standardization will be
a source of great concern to these vendors "because I know I
and a number of other computer professionals are going to be
pushing hard for open-systems standards."
While there may be great anxiety among vendors about what
these standards will ultimately be, standardization of any kind
will be a tremendous boon to the industry -- even though
standardization would presumably allow for many more
players to enter the business.
At the moment, each supplier tends to have its own proprietary
standards for how they communicate a result to a central
system, and this locks the customer into buying central
vote-tallying software from that particular vendor. This in
itself is an inhibiting factor in selling the systems because
from then on, buyers are essentially denied the benefits of
competition. "Federal standards don't govern that
central-vote-tallying software standard, and they ought to. And
in fact I think what we really need are federal standards for
the electronic transmission of vote results that are independent
of whether it's Internet transmission or transmission by smart
card or modems and phone lines," Dr. Jones contends.
INDUSTRY SHAKEUP
The industry can make its own standard or a standard can be
imposed by the states or by the federal government "but we
need a standard," he argues. "This will shake the industry and
how that works itself out is going to be interesting."
A parallel of the importance of standardized technology is
with the home PC. In the very early 1980s, many different
suppliers competed with their own proprietary systems, and it
was not until a de facto winner emerged -- the IBM/Microsoft
standard -- that the PC industry really took off later in the
decade and on through the nineties.
Prof. Jones and some of his like-minded colleagues want to
see open source technology, which takes standardization one
step further. Open source means that the source code is
available for inspection by qualified individuals. This
open-source-versus-proprietary debate is at the heart of the
challenge by the open-source Linux operating system and the
closely guarded source code of the Microsoft Windows
operating system.
Open-source software is the industry's best bet for
transparency and trust in a system that requires an unusual
amount of trust. "There is a widespread distrust of computer
software among election officials and I think it's a deserved
distrust," Prof. Jones says. "How can you trust proprietary
software to be free of features that are not supposed to be
there?"
He notes that independent third party authorities test the
current software used in electronic balloting, but programmers
are skilled at hiding features that are not supposed to be there.
Usually these "Easter eggs" are harmless, such as users being
able to play the programmer's college fight song if they hit a
particular sequence on the keyboard, but some are not so
benign and can be embarrassing for a client -- such as
Microsoft -- that ordered the software, inspected it and took
delivery from the supplier.
VOTE FOR LINUX
Prof. Jones envisions the demise of proprietary third party
code and a move toward open source code in electronic
voting. His preference is an open source code along the lines
of Linux. "Linux is entirely open source, therefore you can
have a version of Linux which you simply freeze say we'll use
this version and the certification process includes the
verification that this is indeed the version of the system on the
machine, and that version is posted on the Web and if anyone
who is suspicious can inspect it," he says.
If big-picture Internet thinkers are to be believed, it is only a
matter of time before voters exercise their franchise from the
comfort of home. On-line voting received a lot of attention
earlier this year when the Democratic primary in Arizona and
a few other smaller elections were held on-line.
Experts say these elections amount to little more than data
collection and not to be confused with a federal or state
elections, where the scale of the undertaking and the need for
transparent verification of the results must be in place. Prof.
Jones, for example, says the only way Internet voting could
work today is if each voter were issued CD-ROMs. The user
would boot his or her computer from that CD-ROM, which
would contain a complete certified software system for
election administration and so bypass his own operating
system.
"This would be so inconvenient, I think what we'll see is not
voting from home on a widespread basis. What we'll see is
voting from polling places and special-purpose voting
machines built like tanks and running certified special-purpose
vote-counting operating systems and voting software," Dr.
Jones says. "And that's exactly what companies like Global
are positioned to sell, and that is exactly what we should be
looking for."
(c) Copyright 2000 Canjex Publishing Ltd.