WCF Windows service permissions issue

I created a WCF service and hosted it using Windows Services host. To install the project, I created a setup project (as described here ). The tutorial says that the serviceProcessInstaller1

Account property for the Network Service is defined in ProjectInstaller.cs . Using this parameter did not start the service on the server. When I tried to start the process manually, it immediately returned to a stopped state.
After I changed my account to LocalSystem, the service works correctly. My questions:

  • Any ideas why it won't work with the Network Service account?
  • What are the security implications of using the server with the LocalSystem account? This server is used locally on the intranet as a reporting server for other servers.
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