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Skype uses RC4 encryption for signaling and AES for voice data. The protocol is proprietary, created specifically for Skype sessions, and does not work with most standard VoIP networks without licensing from Skype.
Skype requires that Ports 80 and 443 be open for outgoing Transmission Control Protocol (TCP) transmissions and recommends that all destination ports above 1024 also remain open. In addition, Ports 5060 and 8000 should remain open for incoming and outgoing UDP transmissions. Skype prefers UDP for voice transmissions.
Because the Skype protocol is closed source, the vendor does not reveal how it works.