Transparent networks are widely seen as the prime candidates for the core network technology of the future. These networks provide ultra high speed end-to-end connectivity with high quality of service and failure resiliency. A downside of transparency is the accumulation of physical impairments over long distances, which are difficult to mitigate using physical-layer techniques only, and the novel challenges in fault detection/localization. We present here the DICONET project, a set of techniques and algorithms implemented at multiple layers, culminating with the physical implementation of a transparent optical network on a testbed. DICONET consists of a set of impairment-aware network management algorithms, such as routing and wavelength assignment, monitoring, failure localization, rerouting, all integrated within a unified control plane, which extends known solutions to include the impairmentawareness of the underlying layers.