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Genachowski's staff announced Thursday that they couldn't strike a deal with Web and network giants on a net neutrality footprint they hoped to serve up to Congress. Any further meetings were canceled, they said.

"Yesterday's end to negotiations simply made it official," wrote Sanford analyst Craig Moffett in a note to investors Friday morning. "It now seems that the FCC is painted into a corner. In a burning building. Made of wood."

In that corner, if Genachowski wants to accomplish his very first policy initiative ¿ net neutrality rules ¿ he won't be able to punt it to Congress. Sen. John F. Kerry (D-Mass.) dimmed those prospects. What to watch for is whether the FCC puts its proposal for reclassification on its September meeting agenda.

Or, the FCC could just kick the issue down the line and try to postpone making a move hailed by public interest groups but reviled by businesses, instead concentrating on other issues such as retransmission consent and its weakened ability to be a watchdog over indecency in broadcast.

"This puts the chairman back into the role of being regulator instead of a facilitator of business-to-business dialogues," said a source familiar with the FCC and private industry negotiations.

That source and others familiar with the talks said progress had been made between parties on to the extent net neutrality rules would apply to wireless providers and whether a carrier could offer specialized services at better quality and speed over others. But significant differences existed. Genachowski, meanwhile, was facing growing criticism for holding the meetings with hand-picked invitees who represented the largest Internet companies -- who had their own interests in mind.

And then another wrench was thrown into the process. Verizon and Google were in parallel conversations on their own and are expected to announce a deal they brokered on net neutrality ground rules. Their agreement would make wireless networks an unregulated space. Verizon and Google have denied some press reports, which they said inaccurately posed their agreement as a business deal that would allow Google to buy up priority access on Verizon's network that would eventually lead to tiered pricing for consumers. But they haven't publicly commented on the bigger point, which is that the firms agreed to allow for general priority service on its networks and no rules for wireless. Other participants in the FCC meetings said they wouldn't agree to such a framework.

"The premise of the FCC talks was to get a rifle shot deal to take to the Hill that could more easily pass through Congress," said Markham Erickson, president of the Open Internet Coalition, which participated in the FCC talks. "That is unlikely, but the chairman has at his fingertips a number of tools with a robust docket. The agency has to take the ball."