Here we derive optimal gain functions for minimum mean square re (cid: 173) construction from neural rate responses subjected to Poisson noise. The shape of these functions strongly depends on the length T of the time window within which spikes are counted in order to estimate the under (cid: 173) lying firing rate. A phase transition towards pure binary encoding occurs if the maximum mean spike count becomes smaller than approximately three provided the minimum firing rate is zero. For a particular function class, we were able to prove the existence of a second-order phase tran (cid: 173) sition analytically. The critical decoding time window length obtained from the analytical derivation is in precise agreement with the numerical results. We conclude that under most circumstances relevant to informa (cid: 173) tion processing in the brain, rate coding can be better ascribed to a binary (low-entropy) code than to the other extreme of rich analog coding.