Designs, methods, and applications for fault localization and fiber security in optical transponders is described. In one embodiment a two-way time transfer protocol or other suitable method for synchronizing clocks between distant transponders is used. The clock synchronized transponders have digital signal processing to continually detect high precision time-histories of physical layer attributes in the transmission between the two transponders. Physical layer attributes can include: state-of-polarization changes, changes in polarization-mode-dispersion, change in propagation delay, changes or loss-of-light, changes in OSNR, changes in BER between the two nodes. By recording these physical layer changes and time-stamping them information on the magnitude and estimated location of the changes can be inferred by from the time records. In one aspect the method may be used in a distributed optical sensor for monitoring trespassing events that are a risk to fiber security of an optical transmission link.