They specifically state it can be "paused" once the system is powered on so I do not believe it will be required to active unless you need it for gaming, skyping, etc. MS has stated as much and several reporters have indicated they have been told the same as well. So unless they are outright lying...I dont see this as some Orwellian controversy. I know a guy who works for MS in their Xbox Live group and he has confirmed the above as well. I still find the fact it requires daily online confirmation checks to be ridiculous, regardless of the argument of whether someone has net access or not. To cut someone out of the loop of being able to purchase one because they may not have a WiFi setup in their home or have the room its in hardwired back to their modem is pretty ridiculous. I can see people having internet access but a single point setup with a modem in an office and no WiFi.