The Kerry County Council rule contravenes government policy, and the majority of planning applications for masts turned down by the council are granted on appeal to An Bord Pleanála.
Also, mobile phone companies have told the Communications Regulator that restrictions on where masts can be located in Kerry are delaying improvements in services being demanded by customers.
But councillors, citing health concerns, voted 17-5 to keep the rule.
Council director of planning Michael McMahon told a meeting that new ministerial guidelines relating to masts say a planning authority should not include separation distances between such masts and other infrastructure.
The council would have to put forward good planning reasons if it was not prepared to comply with the guidelines, he added.
The issue arose during consideration of a new draft county development plan for 2015 to 2021.
Mr McMahon said that since 2009, 70 applications for masts had been refused by the council. Of these 55 were appealed to An Bord Pleanála, of which 49 were granted.
Fianna Fáil councillor John Brassil said the rule was a mistake from the beginning. It was serving no purpose and only making a laughing stock of the council.
“Neither does it do any good to the image of Kerry, which needs a modern communications network for our own people and also to attract industry and investment,’’ he said.
Fine Gael councillor Jim Finucane, supporting, said the rule achieved little and was just a delaying tactic.
However, Independent councillor Danny Healy-Rae believed the rule should be retained, saying communities did not want masts beside them, nor would he want a mast close to his house.
He claimed there were plenty of vantage points for masts in isolated places around the county, but the telecommunications companies were not prepared to spend more money in erecting masts in such places.
Sinn Féin councillor Toireasa Ferris also spoke strongly in favour of the council’s policy and a vote on her proposal that the rule be retained was carried.