A radio-over-fiber (RoF) optical fiber cable system with transponder diversity for a RoF wireless picocellular system that includes at least one optical fiber cable. The at least one optical fiber cable supports one or more groups of two or more transponders, wherein the transponders in a given group are arranged to form substantially co-located picocells. The transponders in each transponder group may also have one of two orthogonal antenna polarizations. A diversity combiner optically coupled to each transponder determines respective signal strengths from each transponder in each transponder group. The transponder with the greatest signal strength in a given transponder group is selected to form the picocell for the given group. This allows for the optical fiber cable system to adjust to changes in the signal strength of each picocell, such as caused by a transponder obstruction or failure.