You're missing the point
XBox Live Subscription *is* the Pass.
See how many games you can play online without XBL. AFAIK none.
To add injury to insult almost all on-line multi-user games are hosted on your own XBox along with the cost of bandwidth to support the game. So MS do not even provide dedicated servers (except for GOW3).
MS offer a glorified matchmaking service and charge you a premium for the service. There is no alternative so no competition.
To make things worse XBL is user based not machine based.
So if four of your kids want to play (say) SF4 online then four separate live accounts need to be paid for.
Even though they can only play one at a time so there is no extra cost network or hardware wise.Even the Family pack is a mockery. XBL should be machine based.
e.g. 1 user x 1 hour per day : Cost $60 per year.
2 users x 30 minutes per day = 1 hour : Cost $120 per year.
Why the price differential given the same usage?
As for this ridiculous myth of covering the cost of Hosting that's a decision MS made. They could have easily allowed a PC Server model such as Quake/Unreal/HL Servers being hosted by whomever desired it when they desired it. Alternatively if the games are peer-hosted then a Server is not even necessary.
As a monopoly they can charge what they like on their own terms.