||This article needs additional citations for verification. (April 2011)|
In telephony, especially in North America, an overlay plan is the practice of introducing a new area code by applying it onto a geographic area that is already occupied by one or more existing area codes, resulting in two (or more) area codes serving the same area.
Prior to the introduction of overlay plans, the method of introducing new area codes (also known as numbering plan areas or NPAs) in a region was to divide the existing territory of one area code into two (or more) pieces, allowing the more established or developed section to retain the original area code, and changing the numbering space of the other section(s) to have a new area code. For example, the original area code for the entire state of Washington was 206; today 206 applies to only the city of Seattle and immediate vicinity. This practice became known as a split plan.
In a number of cases, overlay plans were implemented on a special case basis to implement specialized dialing plans. In some areas, a party in one area code could dial a prefix which was local, but in a different area code, with only 7 digits. If they were calling a distant prefix in the same area code, they would either have to dial 1+ the number or 1+area code+ the number.
This practice was done on a large scale in Washington, DC and its suburbs in Maryland and Virginia. Until 1991, any telephone in the Washington, DC metropolitan area could dial any local number in the District, Maryland or Virginia by dialing the 7-digit number. This setup was possible because the entire Washington metropolitan area is a single local access and transport area (LATA). The way this was implemented was that every telephone in Maryland and Virginia that was in the Washington Metropolitan area was given a 'hidden' phone number consisting of the same number in the District's area code 202, essentially making area code 202 an overlay over the entire region. This meant a Virginia number such as 703-931-xxxx could also have been dialed as 202-931-xxxx, while a Maryland number such as 301-585-xxxx could also be dialed as 202-585-xxxx. It was thus possible for telephone customers in the Washington metro area to dial a number within the metro with only seven digits. However, this also meant no prefix could be duplicated in any of the three territories. By 1991 the demand for more numbers was too great, the use of 202 as a de facto overlay was discontinued, and callers in the area dialing an out-of-area-code number had to dial the full 10 digit number.
Rapid growth 
Urban sprawl accelerated the rate of expansion of metropolitan areas, and multiple split plans have caused the geographical area of a given area code in those regions to shrink. Also, the rapid growth in popularity of mobile phones, in addition to regular land line growth, has increased demand for new phone numbers even more.
The rise in popularity of mobile phones has added to the pressure against split plans, as an area code change affecting the exchange in which a cell phone is based not only forces customers to reprogram their phones, but requires the wireless carrier to reassign the number of every device based in those areas.
Reluctant solution 
To alleviate complaints about such changes, in 1992 the telecommunication industry began to introduce "overlay plans" as a means to introduce new area codes. In this model, one fixed geographic area would concurrently have multiple valid area codes throughout. This plan's main benefit, which addressed many of the issues causing resistance to split plans, was that all existing phone numbers remained unaffected by the new area code. Newly-assigned numbers in the overlay plan areas would have the new area code. As a result, two telephones in the same building could have different area codes. The first use of this solution was in the borough of Manhattan in New York City, where area code 917 was added to the original 212.
However, overlay plans introduced a new inconvenience: mandatory 10-digit dialing (i.e., the area code must be included), even for local calls, in the affected area. This and the difficulty of remembering all the area codes in a geographic area made overlay plans only marginally less unpopular than split plans. 10-digit dialing is not a technical requirement but a U.S. Federal Communications Commission (FCC) mandate to promote fairness among telephone companies.
Overlays initially met with some resistance when they were first implemented, as they resulted in different area codes within the same geographic area. However, with time, overlay plans have been used much more widely in some areas than others. For example, the northern third of Ohio is covered by two large overlay complexes, as is northern Georgia. Connecticut, Illinois, Oregon, New Jersey, Massachusetts, Maryland, and Texas have also used overlays heavily, and are (or soon will be) completely or mostly overlaid. In California, on the other hand, only five of 27 areas have overlays, the first of which was implemented in July 2006.
Telecommunications companies have increasingly favored overlays where possible, since a split plan forces customers not only to change their numbers, but also to reprogram their cell phones, pagers and fax machines.
The first example of an entire state previously only served by a single code being overlaid was in West Virginia, which had been served with area code 304 since the inception of the area code system. Initially, state officials voted to implement area code 681 as part of a split, but lobbying by the telecommunications industry led the state to reverse itself and turn 681 into an overlay.
Overlays have also become more popular than split plans in Canada during the previous decade. All of British Columbia and Alberta, and large parts of Ontario and Quebec are currently overlaid. By 2013, all of Quebec, all of Manitoba and Saskatchewan and almost all of Ontario will be overlaid as well. Nova Scotia and Prince Edward Island are expected to be overlaid in November 2014.
Types of overlays 
The North American Numbering Plan Administration recognizes different forms of overlays:
- Distributed overlay (or all-services overlay): an entire existing area gains another area code serving the entire area. Most overlays are of this kind.
- Single concentrated overlay: only the high-growth portion of an existing area gains a second area code.
- Multiple concentrated overlay: the entire existing area gains multiple additional area codes, each of which serves a different subsection of the original. There are no known examples of such being implemented in the NANPA.
- Multiple-area distributed overlay: two or more area codes gain a single new area code covering such an area. Examples include 872 in Chicago, Illinois (over 312 and 773) and 587 in Alberta (over 403 and 780).
- Boundary-extension overlay: a neighboring area code (either an overlay code or single primary area code) is expanded to serve the area as well. Examples include 321 over 407 in central Florida and 778 over 250 in British Columbia.
- Service-specific overlay: the first overlay area code in the NANPA, 917, is the only example of this. It was originally established as an area code specifically for cell phones and pagers in New York City, but soon after, the FCC said area codes going forth could not be service-specific, but they allowed 917 to remain as such. However, 917 is being used for landlines in New York City on a limited basis.
Number pool management 
The persistent unpopularity of new area code creation, whether by split or overlay plans, led to a change in the rules of number block allocation, in order to conserve the pool of available phone numbers. This change, which allowed for the assignment of smaller number blocks, is commonly known as number pooling. This has noticeably slowed the need for area code growth, but not completely. For example, the Western Washington area narrowly avoided needing an overlay in 2001. Area code 564, originally planned for introduction in October 2001, was canceled in August 2001 after state regulators determined that the existing number pool had begun to be used more efficiently.
See also 
- List of area code overlays
- Interexchange carrier
- Telephone exchange
- Telephone numbering plan
- North American Numbering Plan
- Exhaust date