For a modular multilevel converter (MMC) operating in the medium-voltage range, carrier-based pulsewidth modulation (PWM) methods are good options for modulating the converter, as harmonic contents of the phase voltage/current can be centered around the carrier frequency and/or its multiples. However, in the relevant literature, arm voltage references are mostly normalized by the submodule (SM) capacitor voltage reference, leading to the so-called direct modulation, while the indirect modulation considering the capacitor voltage ripples receives much less attention. This article investigates the indirect modulation of MMCs, focusing on a specific PWM method where only two SMs per phase operate in PWM mode in each control period. It is found that the direct PWM (DiPWM) generates phase voltages/currents that contain high-amplitude low-order harmonics, while the indirect PWM (IndiPWM) presents well-suppressed low-order harmonics but significant distortions around the carrier frequency. The cause of the above problem of the IndiPWM is revealed theoretically through Fourier analysis, and a solution with simple implementation is developed by rearranging the switching pulses of the PWM-mode SMs. Both simulations and experiments are carried out. The results show that the proposed method combines the advantages of both DiPWM and IndiPWM, achieving low harmonic distortions simultaneously in the low frequency and around the carrier frequency.