Remember gamespy and the tunnel service? I think that not long from now a group of middle aged xbox enthusiusts will get together and start thier own server, it shouldn't be too hard to figure out how micro$haft does things. think about it, start with 1000 members, at most 500-700 would be on at one time. i heard somwhere that each box needs about 125 kb of bandwith multiply that by 600 and you get 75 mb of bandwidth. NOW, Ewan offers a 7 mbps connection for $7,125 dollars a month. That group of xbox enthusiasts could theoretically offer service for $8 dollars a month.
But that's if the games are actually run using server bandwidth! Micro$haft may be running games without the server but just using peer to peer games (like the gamespy tunnel service) with battle reporting to the server. in that case i would think that someone could provide service for 5$ a month.
You may say "wait, live only connects to micro$haft servers..." well im sure someon could write a program to hijack that conection, you know, intercept it and redirect it to the other server...lol
Think on it.