Telnet is disabled by default on the controllers. You can enable it under the Management - Telnet/SSH page or with the command "config network telnet enable"
Telnet, by default, is disabled. Try SSH. If not do what Dan has described and enable Telnet via HTML or HTTPS.
I do not encourage/recommend unsecure access to the WLC via Telnet and/or HTTP.
Hope this helps.
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