Unfortunately the law was passed during world war 2 to try and prevent the whole spying thing and its never been updated since.
Until Ofcom(communications regulator) decides to do something we are stuck with it.
Recently(in the last 2 months) though (due to pressure) they have put a let in clause to this law to allow the ipod transmitter (i forget the name) to be used on UK soi even previously prohibited by this law.
Those in the UK, let us continue to write to our MP's and to allow a change in this law.