I experience the same problem. I'm using PHP4.1.2

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Here's your problem and this works for me.
Took me a few days to figure this one out.
Right now I'm working on serial communications in php.
It seems it can be done but only with some effort.
(under windows nt, xp, 95, etc)
well here's the telnet code..
------------------
function telnet_get_til_input($socket=0)
{
$response = '';

if ($socket === 0) { return 0; }

$line = fgets($socket, 1024);
$response = $line;

while ((!feof($socket)) and (!($line === false)))
  {
   $line = fgets($socket, 1024);
   if ($debugging) { echo $line; }
   $response .= $line;
  }

return $response;
}; // end function telnet_get_til_input
------------------
you might also want to make sure you put this code to connect
------------------
function telnet_connect($server='127.0.0.1',$port='23')
{
$socket = 0;
$socket = fsockopen($server, $port);
socket_set_timeout($socket,2,0);
$response = telnet_get_til_input($socket);

return $socket;
}; // end function telnet_connect
------------------
and here's the disconnect code
------------------
function telnet_quit($socket)
{
return fclose($socket);
}; // end function telnet_quit
------------------
you might want to edit those a lot to have extra commands in them.. but they work good.
let's get some posts on com ports under windows and linux for php.. talk about limited..