More details are here: http://www.theguardian.com/world/2013/sep/05/nsa-gchq-encryption-codes-security
It's appearing increasingly likely that they've cracked RC4 (which is rather old, circa 1987), but it's also extremely UNlikely they've cracked e.g. AES (Rijndael). More likely is that they've simply obtained copies of the keys being used to secure traffic they are interested in, or have managed to compromise commercial implementations of such in a way that gives them a back door. Bruce Schneier has a couple of interesting posts on this subject here and here.
I mention Bruce because he's the author of twofish, which was one of the 5 finalists for the AES encryption standard competition. His entry was beaten out by Rijndael, but not by much. To say the man knows something about encryption and security is putting it mildly.
Perhaps they have a quantum computer with enough Qubits to crack it? No such machine officially exists, as far as I know.
RC4 has known issues, including biases, which seriously undermine its usability. On the other hand, ppl are making guestimates as to what has actually happened.
