MPPC, as it is controlled by the operating system, can receive as much data as it wishes to compress, before forwarding it on to the modem.
The modem's hardware must not delay data too much, while waiting for more to compress in one packet, otherwise an unacceptable latency level will result.
It also cannot afford to, as this would require both sizable computing resources (on the scale of a modem) as well as significant buffer RAM.
Software compression such as MPPC is free to use the host computer's resources, exceeding the modem's by several orders of magnitude.
This allows it to keep a much larger buffer to work on at any one time, and it processes through a given amount of data much faster.