|Please post the error message, and if available, operator console messages.|
There might be more telnet sessions active than the limit defined in the telnet service configuration.
Depending on the TCP/IP stack , show the configuration.
If it is "TCPIP services for VMS", then use
TCPIP SHOW SERVICE TELNET /full
Do a "show system" to see all the process, eventually there are 'hanging' telnet sessions.
"show device tna" also list active telnet terminal devices, may give some hints.