Back in 1984, I was working for a Northwest brokerage firm, so got to watch this bit of history first-hand.
The short version: AT&T was declared a corporate monopoly in 1984 and forced to split up into seven operating companies nicknamed "baby bells".
In 2006 (and 2007) through mergers and acquisitions, many of the former BBs are reuniting.
Of course, this raises the monopoly question once again (please feel free to dispute me).
Engadget has a great summary, starting with "FCC approves $87b AT&T + BellSouth merger: now what?". This post includes a map of the US that shows the AT&T properties; amazing how much of the country might soon be AT&T territory again.
They've also published the whole history in "The Engadget Guide to AT&T Wireless/Cingular/SBC/AT&T merger mania".
Well worth a look.