Splitting up Bell (and the lab) was their idea:

Feeling that it was about to lose the suit, AT&T proposed an alternative: its breakup. It proposed that it retain control of Western Electric, Yellow Pages, the Bell trademark, Bell Labs, and AT&T Long Distance. It also proposed that it be freed from a 1956 antitrust consent decree, then administered by Judge Vincent P. Biunno in the United States District Court for the District of New Jersey, that barred it from participating in the general sale of computers.[4] In return, it proposed to give up ownership of the local operating companies. This last concession, it argued, would achieve the Government's goal of creating competition in supplying telephone equipment and supplies to the operative companies. The settlement was finalized on January 8, 1982, with some changes ordered by the decree court: the regional holding companies got the Bell trademark, Yellow Pages, and about half of Bell Labs.

https://en.wikipedia.org/wiki/Breakup_of_the_Bell_System

I mean, for starters you gained the right to plug your own hardware into the telephone jack at your house.

One, on the computing side, the threat of breakup is part of what was good about the Bell Labs culture before the actual breakup. Why was Unix free-ish? Because Bell Labs was forbidden from going into computers. After the breakup, they suddenly expected to make money from Unix, and that was a major problem for Plan 9. Okay, so that didn't work out, but if Bell Labs had been trying to make money from Unix from the beginning, it would have been worse.

Two, it's hard to get the exact cause-and-effect, but clearly the breakup coincides with a period of extreme telecommunications flourishing. Maybe it would have happened anyway, but it clearly didn't hurt on the telcom side.