"HRESULT: 0x80070542" translates "Either a required impersonation level was not provided, or the provided impersonation level is invalid."
Do you provide an "Impersonation level" within your code or do you possibly intend to delegate impersonation?
As your issue is pretty general with WCF service and Impersonation, I expect you would succeed finding a solution within the World Wide Web.
Can you provide a bit more than just that single line of code? Possibly enough to immediately being able to reproduce?