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Optical coding has been proposed and has been well investigated for the monitoring of standard time domain multiplexing passive optical networks (TDM-PONs). We propose a physical layer fault management and protection system for next-generation passive optical networks, so-called long-reach PON (LR-PON), based on passive optical coding. Our approach exploits adapted, performance enhanced, and inexpensive passive optical components in the field, and electronic switches in the central office (CO). This allows detection and localization of the faulty segments in addition to the faulty nodes, hence decreasing the false alarm probability encountered in previous proposed approaches. We show that ring duplication protection in LR-PON can save almost half the cost compared with full duplication protection, with relatively high availability (99.992%). We describe the implementation strategy of our system in various well-known metro network topologies, including (1) single-ring-, (2) double-ring-, and (3) double-fiber-pairs-based ring topologies; all are considered different varieties of ring-and-spur LR-PON. The internal architecture of the remote nodes and the CO are also described in addition to the appropriate placement of our passive monitors. We develop two novel symmetric coding settings. We call them symmetrical optical encoders, which are suitable for fault detection and localization in the ring. We also develop the algorithms required to be executed by the network management system in the CO for fault detection, localization, and protection. Expressions for the upper bound notification and recovery times are also derived. Finally, we estimate that our system can recover from a fault in less than 0.5 ms for a 100 km ring length.