Automated merchants

NEED A QUICK hot cup of coffee or snack to go? If there is one store that could satisfy such cravings minus the hassle of making your own, it would be the friendly vending machine.

Consumers’ benefits aside, the vending machine is an almost non-stop, labor-free retail business. All that is needed is an ideal location and the right combination of merchandise to get started.

A brief history

Vending machines date as far back as 215 B.C. when a holy water-dispensing device was identified in the temples of Egypt by Hero, an Alexandrian mathematician. Asia also had its vending machine prototypes: In China, for example, coin-operated pencil vendors had been recorded to have existed in 1076 B.C.

In the 1700’s, coin-operated tobacco sellers appeared in English taverns. Vending machines in the United States started in the late 1800s. In 1886, several patents for coin-operated dispensers were granted in the US, leading to the installation of Thomas Adams Company’s Tutti-Frutti machines on New York elevated train platforms in 1888.

Since then, more products were added to the shelves of vending machines. There were vending machines for stamps (circa 1905), commercial cigarette (1926), bottled soda machines (1930s), and even supposedly fresh foods like sandwiches and milkshakes (late 1950s). It has evolved to accommodate advances in technology, such as the addition of bill acceptors, microwave-oven furnished machines, glass-front machines, and even credit card devices.

In the Philippines, vending machines started in the 1960s with the introduction of automats or cafeterias where food was served from machines. It did not, however, proliferate until the 1970s as the coins back then were irregularly-shaped and could not fit into the coin slots of the imported vending machines.

Nevertheless, the creation of round coins marked the return of the vending machine business in the country, which was led by a Filipino entrepreneur who introduced gum-ball machines. Soft drink vending machines later proliferated. More recently, the introduction of bill-acceptors also led the way for more innovative vending machines in the country.

Vending categories

The National Automatic Merchandising Association (NAMA), a US-based trade association for vending machine business, defines four major categories in the industry. The most basic machines offer the so-called “4Cs” — an abbreviation for coffee, cup soda, candy, and cigarettes. From this basic definition emerge the four major categories:

“Full line” refers to operators selling food and refreshments other than the 4Cs, such as hot canned food, canned soda, refrigerated food, and the like.

“Specialty” is focused on one particular type of product. For example, OCS, or Office Coffee Service, provides equipment and kits that are all focused on coffee and coffee-related items. Bulk machines, a common sight in supermarkets, dispense unwrapped gums, candy, novelties, and the likes, which are a common sight in supermarkets.

“Music/game” refers to coin-operated amusement devices such as music machines and video games.

“Street” refers to the combination of specialty, full line, and music/games vending. It is more often used as a description of the place where the machines are installed; that is, public places such as restaurants, taverns, resorts, etc.

Vending in the Philippines

During its boom phase in the late 1990s, five players led the automated vending business: Sam’s Vendo Corp., Philippine Vending Corp., Vendo King, American Vending Machines Trading Systems, Inc., and Vending Specialists, Inc. These firms operate differently from one another. Sam’s Vendo, Vendo King, and American Vending sell the machines, while Philippine Vending operates automated machines instead of selling them and Vending Specialists is both into selling and operating bulk machines.

As of date, Philippine Vending Corporation is reportedly the leading player in the automated vending industry. Philippine Vending is the only full-line vending company that serves more than 100,000 consumers a day, operates more than 3,200 machines, and serves 600 establishments.

The company covers many regions in the country such as Central Luzon, National Capital Region (NCR), Southern Tagalog, and Cebu. Tri-East Philippines, Inc. is also an industry player involved in vending machine distribution.

Issues and prospects

There are several issues to note about this industry. For one, automated vending is a capital-intensive industry that exhibits economies of scale: that is, an entrepreneur can own and operate more than one or two machines to earn profit. This is the reason why Philippine Vending does not sell machines but rather operates them by itself. In 2000, Vending Specialists president Manuel E. Pangilinan said that this kind of business is all about numbers and building economies of scale.

Automated vending also has other advantages. Vending is an all-cash business; all sales transactions are in the form of cash and thereby provide liquidity. Vending machines, in general, also require low maintenance, and a prospective entrepreneur only needs to make sure that his installation location is vandal-free.

Vending machines also can work 24 hours a day, 7 days a week without the need to hire employees. Finally, minimal overhead costs allow the entrepreneur to sell the merchandise at competitive prices. (As a side note, vending machines can also serve as a channel for advertising. That is, a vending machine not only can dispense canned sodas but can also be a mini-billboard.)

Location is an important factor in this business. An entrepreneur should be able to find a feasible location for his machine to enjoy maximum profits. An area should have constant foot traffic, such as sidewalks or offices. It should also be safe from vandals. The most important consideration is that the machine should complement the market profile of the area. For instance, a coffee machine is best suitable in offices.

With the fast-paced lifestyle nowadays, more people find convenience in everything that is quick and almost hassle-free. As this kind of market profile grows, we can also expect automated merchants to expand further to cater to the demands of the fast-paced Filipino.

Comelec urged to adopt cyber security amid hacking fears

A computer expert said Sunday that there is need for the Commission on Election (Comelec) to adopt cyber security amid fears of internet hacking as the Philippine is set to go for poll automation this 2010.

Speaking at the Balitaan sa Tinapayan news forum held in Sampaloc, Manila, computer expert Dante Mara raised the concern of hacking because the system to be used by consortium of Smartmatic-Total Information Management Corp. (TIM) may be susceptible to hacking of internal data system.

The Smartmatic will supply the precinct count optical scan (PCOS) machines that the Comelec will use in automating the 2010 national elections.

Mara stressed that the Comelec should opt for a closed loop network that would not be open to outside influences.

“There is no assurance from Comelec and Smartmatic that there will be no problem on mode of connectivity and the outside influences as they will be using worldwide net,” he said.

“The Smartmatic will be using overlaying network using satellite so the data will be transmitted to the main from regional and provincial. The system is good but many factors can affect the transmittal like the clouds, the rains and most importantly the power supply. What if they encounter powers supply interruption?,” he asked,

Mara said another concern is the risk of hacking because Smartmatic will be using worldwide network (internet) as it is open to interference worldwide. “This is the reason why the Comelec should adopt cyber security and come up with a system for auditing,” he said.

Retired police general Virtus Gil, former Western Police District (WPD) director and is now into cyber security agency, echoed Mara’s concerns, saying that the he read the contract of Smartmatic with the Comelec and it did not touch much of the cyber security of the system.

Mara also said the Congress needs to allocate additional P7.2 billion for the cyber security. “This is also for the future of the government. In fact the system to be used should be owned by the government to avoid outside influences,” he said.

Meanwhile, Comelec Commissioner Rene V. Sarmiento Sunday allayed fears that the automated election system can be hacked, the vote results altered during electronic transmission and the system programmed to favor specific candidate or group of candidates, even as he stressed that Republic Act 9369 or the Poll Automation Law squarely addresses these concerns.

In an 11-page study which he submitted to the Comelec en banc headed by Chairman Jose A.R. Melo coinciding with the publication of the statement attributed to Issues and Advocacy Center and the National Computer Center that the Philippine Automated Poll System can be hacked, Sarmiento cited at least 10 safeguards contained in RA 9369 which were precisely crafted to prevent hacking and abort automated cheating and tampering of results during transmission.

Sarmiento said these safeguards were formulated by lawmakers with the help of inputs from the private sector and information technology (IT) experts from nongovernmental electoral reforms groups who appeared during the public hearing on the legislative measure.

He said among the safeguards are the Source Code Review by any interested political party or groups and Field Testing of Precinct Count Optical Scan (PCOS) machines followed by a mock election event in one or more cities or municipalities. RA 9369 also provides for the examination and testing of PCOS by political parties and candidates or their representatives, Sarmiento pointed out.

A moment in history: Understanding poll automation for the 2010 national and local elections

FOR the May 10, 2010, elections, the Commission on Elections (Comelec) will implement full automation in the Philippines.

Republic Act 9369, or “An Act Authorizing The Commission on Elections To Use An Automated Election System In The May 11, 1998 National or Local Elections And In Subsequent National And Local Electoral Exercises,” authorizes the Comelec to undertake this automation, a first in the political history of the country.

From July 30, 1907 (elections for 80 seats in the First Philippine Assembly fought between Partido Nacionalista and Partido Nacional Progresista), up to October 29, 2007 (barangay elections), a total of 100 years, the system of elections in the country was manual. Under this system, voters have to write by hand the names of their chosen candidates, and counting is done with the board of election inspectors (BEI) reading the votes aloud and recording them by means of tara on a tally sheet or election return, and on a blackboard or tally board. Canvassing then takes place in the municipal or city board of canvassers, provincial board of canvassers and national board of canvassers, respectively.

It was this manual system of elections that gave rise to fraudulent election practices like misreading, misappreciation and substitution of ballots at the precinct level and tampering of election returns and statements of votes at the canvassing stage. After each election, the Comelec and courts are swamped with complaints of election fraud.

It took several years before RA 9369 became a law. It was shepherded in the House of Representatives by Rep. Teodoro Locsin and in the Senate by Sen. Richard Gordon. According to Sen. Edgardo Angara, sponsor in the Senate of the supplemental budget for election automation, the automation of the local and national elections in the Philippines “is imperative in order to respond to the crying need of our people: credibility of elections and legitimacy of leadership.”

Automated system under RA 9369

RA 9369 defines an automated election system “as the use of an appropriate technology which has been demonstrated in voting, counting and the consolidation, canvass and transmission of election results.” The system can either be paper-based or a direct recording electronic (DRE) election system. Paper-based election system uses paper ballots, records, and counts votes, tabulates, consolidates, canvasses and transmits electronically the results of the vote count. A DRE election system uses electronic ballots by means of a ballot display in a mechanical or electro-optical component that can be activated by the voter. It must be able to record voting data and ballot images, and to transmit voting results electronically. In either system, paper-based or DRE, the paper ballot, printed or generated by the technology applied, is considered as the official ballot.

Pilot-testing of paper-based and DRE election systems in 2008

The paper-based election system and the DRE election system were pilot-tested in the 2008 Regional Autonomous Region in Muslim Mindanao (ARMM) elections. The paper-based election system using the Optical Mark Reader (OMR) technology was pilot-tested in Sulu, Basilan, Tawi-Tawi, Lanao del Sur and Shariff Kabunsuan. The DRE was pilot-tested in Maguindanao. Though there were pluses and minuses in the conduct of the automated elections in the six provinces, the automation was viewed positively. The Parish Pastoral Council for Responsible Voting reported that the DRE and OMR cut short the time for voting, counting and canvassing, eliminated election protests and minimized election-related violence. Within 48 hours, the regional governor, regional vice governor and regional assemblymen were proclaimed by the Comelec.

On the basis of this pilot-testing of the two automated election systems in the regional ARMM elections and on the basis of cost factor, the Advisory Council—a creation of RA 9369, composed of the chairman of the Commission on Information and Communications Technology (CICT); one member each from the Department of Education, Department of Science and Technology (DOST) and academe; three members representing ICT professional organizations; and two members representing nongovernment electoral reform organizations—recommended on March 29, 2008, that for the 2010 presidential elections, the Comelec shall adopt either the DRE or Precinct Count Optical Scan (Pcos) technology for all areas, subject to the automation budget, or the Central Count Optical Scan (Ccos) technology for all other areas not covered by DRE or Pcos. In the Pcos (an improved version of OMR), the ballots shall be scanned, recorded, photographed and counted in the precinct level. In the Ccos, the ballots coming from precincts shall be brought to a central count center to be scanned, recorded, photographed and counted. To avoid the risks of ballot snatching and harassments during transport from precincts to municipal halls and taking into account the election automation budget, the Comelec chose the more cost-saving and widely used Pcos.

Optical Scan Technology

In the United States, optical scan ballots were used by 29.5 percent of the voters in 2000 and by an estimated number of 104.83 million voters in 2008. The optical scan ballot is a paper-based technology that relies on computers in the counting process. Voters make their choices by using a pencil or pen to mark the ballot, typically by filling an oval or drawing a straight line to complete arrows. In the 2010 elections, the voters shall fill or shade ovals opposite the names of the chosen candidates.

Voting and counting flow using Pcos

On the day of the elections that will start at 7 a.m. and end at 6 p.m., a registered voter, after proper identification and issuance of a ballot by the BEI, will shade the ovals or circles opposite the names of his/her chosen candidates. He/she feeds the ballot into the Pcos. The Pcos scans, photographs and records the ballot that will thereafter be dropped into a transparent ballot box. If the ballot is spurious, it will be rejected by the Pcos.

At the close of voting hours, the Pcos is given the command to start counting the recorded votes. The Pcos prints out eight election returns that reflect the names of candidates and the number of votes garnered by each candidate. The contents of the election return are publicly read, signed and thumbprinted by the BEIs and the watchers. One copy of the election return is posted on the wall, while the results are read out loud. Other copies are distributed as provided for by law. Upon disposition of the eight copies, the BEI digitally signs and encrypts the soft copy of the election return in the Pcos, which then electronically sends the election results to the corresponding city/municipal board of canvassers and to the dominant majority party, dominant minority party, accredited citizens’ arm, Kapisanan ng mga Brodkaster ng Pilipinas and the Comelec central backup server. After the electronic results have been transmitted and known nationally and even internationally, additional copies not to exceed 30 may be printed and given to requesting parties at their own expense.

For an easy understanding of the process in voting, the Comelec, through the General Instructions it will issue, shall explain the manner and procedure of voting, taking into consideration, among other things, the secrecy of the voting.

The canvassing procedure of the electronically transmitted results by provincial, city, district and municipal board of canvassers, national board of canvassers for senators and party-list representatives and by Congress for president and vice president are provided in RA 9369.

The speed and transparency in transmission eliminate the opportunity to change election results and thwart election cheats to resort to dagdag-bawas or vote-padding and vote-shaving schemes. It is the Comelec’s estimate that in 48 hours, the public will know the winners for the national positions.

Transparency and confidence-building measures

Many are apprehensive about the automated election system. Some questions raised were: (1) Will it not engender massive automated cheating? (2) Can it be hacked? (3) Can results be preprogrammed? (4) Can the vote results be altered doing electronic transmission? (5) Can the system be programmed to favor a specific candidate or group of candidates?

To address these fears and concerns, RA 9369, which was meticulously crafted with inputs from private-sector IT experts and from nongovernment electoral-reform groups during its long pendency in Congress, provides for the following:

1. Source Code review by any interested political party or groups. The source code is the human readable instruction that defines what the computer equipment will do (Section 11, RA 9369).
2. Field Testing of Pcos machines followed by a mock-election event in one or more cities/municipalities (Section 11, RA 9369).
3. Examination and testing of the Pcos by political parties and candidates or their representatives, citizens’ arm or their representatives (Section 14, RA 9369).
4. Preparation of continuity plan containing contingency measures in case of systems breakdown, and copies of this plan shall be furnished all political parties and party-lists (Section 13, RA 9369).
5. Random Manual Audit in one precinct per congressional district randomly chosen by the Comelec in each province and city. Any difference between the automated and manual count will result in the determination of what cause and initiate a manual count for the precincts affected by the computer or procedural error (Section 29, RA 9369).
6. Accredited political parties and deputized citizens’ arms of the Comelec shall assign watchers in the printing, storage and distribution of official ballots. Ballots shall have necessary safeguards like bar codes, holograms, color-shifting ink and microprinting (Section 15, RA 9369).
7. Widespread stakeholders’ education and training program through newspapers of general circulation, radio, television and other media forms, as well as through seminars, symposiums, forums and other nontraditional means to educate the public and fully inform the electorate about the automated election system and inculcate values on honest, peaceful, orderly and informed elections (Section 31, RA 9369).
8. Every registered political party or coalition of political parties and every candidate shall be entitled to one watcher in any polling place and canvassing center (Section 26, RA 9369).
9. The Technical Evaluation Committee, composed of a representative from the Comelec, the CICT and DOST, will certify not later than three months before the date of the electoral exercise, categorically stating that the Pcos, including its hardware and software components, is operating properly, securely and accurately (Section 11, RA 9369).
10. The Advisory Council will continue to provide advice and assistance in the identification, assessment and resolution of systems problems or inadequacies that may surface or resurface in the course of testing, operationalization, storage or disposition of the Pcos. It will also provide help in the risk management of the Pcos when a contingency or disaster situation arises (Section 9, RA 9369).

Other ingredients needed

But poll automation is not the be-all and end-all of clean and credible elections. It will not stop in an automated fashion vote-buying and election-related violence. Other ingredients must come into play and must be considered. These are the campaign for the registration of the more than a million-strong youth, cleansing of voters’ lists, Comelec/voters/candidates education on good citizenship and patriotic governance, Armed Forces/National Police militant support to the Comelec to maintain peace and order in areas of concern and immediate concern, Smartmatic/TIM’s corporate social responsibility, GO-NGO-Comelec partnership, presidential statesmanship and servant leadership vis-à-vis the elections, strict enforcement of election laws, reshuffling of election officers, mass media information/education support and passage of early voting bills in Congress.

In the 2008 US presidential elections, early voters appeared to have accounted for about one-third of the votes cast in the presidential race, availing themselves of early voting either personally in a voting machine at a central polling location, or by mail using a paper absentee ballot. In the April-May 2009 general elections in India with 714 million registered voters, 8.6 million polling stations and 1.4 million electronic voting machines, elections were scheduled separately on April 16, April 23, April 30, May 7 and May 13. Considering the vast land territory of the country and enormous number of voters, India was divided into five electoral zones, each zone consisting of several states and union territories, and each zone assigned with an election date. This zonal and early-voting arrangement enabled the Indian government to focus on each zone its security forces and electoral resources through its electoral commission.

The Comelec, under the leadership of Chairman Jose A. R. Melo, is aware of these different facets of electoral reform and hopes that with the Comelec and everyone magnanimously contributing and doing his/her share, the objective of clean and credible elections will be achievable. After all, democracy rests on three pillars: upright governance, enlightened electorate and vigilant civil society. It is the government and people working together for the public good.

Attitude of hope

Hebrew soldiers said Goliath was too big they could not kill him. David said Goliath was too big, his slingshot would not miss him. Attitude. Equipped with the correct attitude, our people can view this electoral breakthrough called poll automation, and the generous support of many all over the land, young and elderly alike, as reasons for hope and optimism. With prayer and work (ora et labora) that there are better days ahead, Filipinos will succeed. If we whine, we complain, we bemoan that the Filipinos are beyond redemption, we will fail. Against gloom and doom, we labor and hope that change is within reach, and proclaim that God provides and He will never fail the Philippines!